Tools of The Trade: Bybit Engage

On Thursday, we saw another of our Bybit Engage discussions in our Bybit Ambassadors Telegram group. Avigad, our ambassador from Israel, shared his top tips on what tools to use when trading.

What are trading tools?

What are the best tools for technical analysis?

Some of the best technical indicators for trading include Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), Bollinger Bands, and On Balance Volume (OBV), which we’ll look at in this article.

MACD

26 period EMA (Exponential Moving Average) — 12 period EMA (at closing prices)

If the MACD is positive, this correspondingly indicates upside momentum. When the MACD slopes upward towards crossing the signal line (as seen below), it is known as a bullish cross and can be interpreted as a good time to buy. If the MACD is negative, this indicates downside negative momentum. When the MACD slopes downward and crosses the signal line and heads below it, it is known as a bearish cross and this can be interpreted as a good time to sell.

RSI

RSI = 100–100 / (1 + RS)
RS = Average of periods which close up in price / Average of periods which go down in price
Normally the number of periods used is 14, but it is entirely up to the trader how many to use.

Generally, if the value is under 30, it indicates the asset has been oversold. On the flip side, if the value is over 70, it indicates the asset has been overbought.

Bollinger Bands

Middle Band — Simple Moving Average over 20 days (SMA)
Upper Band — SMA over 20 days + (Standard deviation of price over 20 days x 2)
Lower Band — SMA over 20 days — (Standard deviation of price over 20 days x 2)

OBV

If an asset’s price closes up, the volume for that day is added to the OBV’s total.
If an asset’s price closes down, however, the volume for that day is taken away from the OBV’s total.
If it is the same, no calculations are made.

The concept is really quite simple — if there is a higher high (unless there is a resistance zone), this means there is positive volume pressure, and there is a good chance that the price will increase. And the opposite is true with a lower high, unless it (hits a support zone). This means there is negative volume pressure, and there is a good chance that the price of an asset will decrease.

Final thoughts

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