Bitnation Forecast Methodology
Our price predictions are primarily based on various machine-based algorithms that track the relative strength index (RSI), moving average convergence divergence (MACD), Bollinger bands, moving weighted average (MWA), and average true range (ATR) for each individual cryptocurrency. We can foresee future price points and attempt to forecast the market’s direction by analyzing the price movement through algorithm-obtained data and using our machine learning technologies.
Relative Strength Index (RSI) Indicator
The Relative strength index (RSI) is among the most widely used momentum indicators in the technical analysis of cryptocurrencies. In order to determine whether a virtual asset’s price is in an overvalued or undervalued region, RSI evaluates the speed and magnitude of recent price swings.
J. Welles Wilder Jr. developed the RSI, which, on a scale from 0 to 100, represents an oscillator. An RSI reading of 70 or higher typically indicates an overbought situation, while a number of 30 or lower usually indicates an oversold situation.
The RSI has several more use besides detecting overbought and oversold stocks. It might also point to assets that are about to see a price correction or a change in trend. It can act as a signal for both buying and selling.
When used in conjunction with other technical indicators, the RSI can help traders by empowering them to make more informed trading decisions.
Moving Average Convergence Divergence (MACD) Indicator
The MACD line, the signal line, and the MACD histogram are the three components that make up the Moving Average Convergence Divergence (MACD) indicator.
The MACD line is typically shown in blue, while the signal line is typically shown in orange. The MACD line crossing over the signal line indicates a strong buying signal and that the bulls are in control of the price action. The MACD histogram, in this case, is bullish, upright, and most likely green in color.
Similarly, the bearish trend is dominant in the timeframe when the signal line is above the MACD line, which indicates that the sellers are in charge. The MACD histogram is bearish, inverted, and most likely red in this instance.
Bollinger Bands (BB) Indicator
The Bollinger Band is a popular technical analysis chart signal that traders in many markets, including cryptocurrencies, equities, and securities, use extensively. The indicator, which John Bollinger first introduced in the 1980s, provides unique insights into the asset’s price and volatility.
Trend tracking, spotting overbought and oversold levels, and keeping a look out for breakouts are just a few uses for Bollinger Bands.
The indicator consists of three lines: an upper band, a lower band, and a moving average in the middle.
The upper band is considered to be in a bullish region, and a price action uptrend will be formed if it breaks above it. On the other hand, the lower band is considered to be in a bearish region, and a price action downtrend will be formed if it breaks below it.
Average True Range (ATR) Indicator
The ATR was first introduced by J. Welles Wilder Jr., and its primary function is to assess the volatility of the market by analyzing the price movement. To be more explicit, it is the average of the true ranges over a selected period of time. The ATR range, which can be intraday, daily, weekly, or monthly, is most commonly 14 periods.
In a nutshell, the ATR provides you with information about the average price variation of assets like cryptocurrency over a specified time period.
Moving Average (MA) Indicator
A moving average is a type of price indicator that creates real-time averages of asset prices to smooth out price data over a given time period.
The most extensively used averages in the cryptocurrency market are 10, 20, 50, 100, and 200. We can validate that prices are bullish if the moving average for a shorter duration is higher than the moving average for a longer one and vice versa, showing that the asset is going in the opposite direction.
Accumulation/Distribution Line (A/D) Indicator
The accumulation/distribution line is a graph that depicts when a coin starts to accumulate. For this line, there are four possible outcomes:
- Lower prices are to be expected if both the price trajectory and the line are in a downward trend.
- A sell-off is possible if the price trajectory is uptrending and the line is downtrending.
- A shift in trend, or higher prices, is feasible if the price trajectory is in decline and the line is in an uptrend.
- A shift in trend, i.e., lower prices, is feasible if the price trajectory is uptrending and the line is downtrending.
On-Balance Volume (OBV)
On-balance volume indicator displays the current trade volume for an asset, along with whether it is moving into or out of a particular pair of digital currencies. Four scenarios apply to this line:
- If the price trajectory and the line both indicate a downward trend, another sell-off is set to take place as volume decreases.
- Higher prices will result when more volume enters the crypto token if the line follows an uptrend and the price trajectory is likewise in an uptrend.
- Lower prices will follow as volume departs the pair if the line is trending downward and the price trajectory is upward.
- Higher prices will follow as volume enters the price action of the token if the line trends in an uptrend and the project is in a downtrend.