What is MA (moving average)?
MA (Moving Average) is a type of technical indicator drawn by calculating the average of the prices of a crypto asset over a certain time period. It smooths daily price volatility and makes the direction of the trend clearer. It is one of the most basic and most widely used indicators in technical analysis.
How is the moving average calculated?
The moving average is the arithmetic average of the closing prices in the selected period.
Formula: MA = (P₁ + P₂ + ... + Pₙ) / n
Here:
- P₁...Pₙ: The closing price of each day (or candle) in the selected period
- n: The length of the period
For example, a 14 day MA is the average of the closing prices of the last 14 days, and each new day a new average is calculated by removing the oldest data.
Common MA periods
In technical analysis different periods represent different time perspectives:
| Period | Area of use |
|---|---|
| 10 – 20 | Short-term trend |
| 50 | Medium-term trend |
| 100 | Long-term trend |
| 200 | The big picture (macro trend) |
Investors may follow more than one MA on the same chart depending on the strategy they use.
The principle of reading MA
The moving average shows how far the price has deviated from the average level and in which direction the trend is moving:
- If the price is above the MA: Buying pressure may be stronger over the medium to long term; an upward tendency
- If the price is below the MA: Selling pressure is stronger; a downward tendency
- The slope of the MA: If the MA line slopes upwards the trend is rising, and if it slopes downwards it is falling
- Support and resistance function: Widely used MA levels (50, 100, 200) may be perceived by the market as support or resistance
MA crossovers
In technical analysis, more than one MA crossing each other produces important signals:
- If a short-term MA crosses a long-term MA upwards: A signal of upward momentum
- If a short-term MA crosses a long-term MA downwards: A signal of downward momentum
These signals may not be enough for an investment decision on their own; it is recommended that they be assessed together with volume and other indicators.
MA variants
On Paribu an equally weighted moving average (MA) is offered by default. In technical analysis there are also variants that use different weighting methods:
- EMA (Exponential Moving Average): Gives more weight to recent data; responds faster to price movements
- WMA (Weighted Moving Average): The weight is distributed linearly
How do I turn on MA on Paribu?
To turn on MA, the chart type needs to be candle. You can tap the MA label in the indicator bar above the chart on the market detail screen of an asset. On the Buy/Sell screen you need to tap the Indicators option on the Chart tab and mark MA on the screen that opens.
The MA line is drawn directly over the candles in blue. If you also turn on EMA, the EMA line appears in pink and you can compare the two averages. Next to the MA and EMA labels in the indicator bar there is a small dot in the same color as the line on the chart; you can tell which line belongs to which indicator from that dot.
Note: Indicator periods are fixed on Paribu; there is no period setting in the app. The period information above reflects values that are generally accepted in technical analysis.
The limitations of MA
The moving average is a strong trend indicator, but it has some limits:
- A lagging indicator: Because it is calculated from past data, it does not always reflect price reversals in time
- Misleading signals in flat markets: While the price moves within a sideways band, MA crossovers can produce frequent signals
- Not sufficient on its own: When deciding, it should be interpreted together with volume, momentum indicators and price structure
Tip: Because the period is fixed on Paribu, the way to compare different time horizons is to change the time interval. The same indicator gives a short-term picture on a 15 minute chart and a long-term one on a 1 day chart; comparing a few intervals is healthier than relying on a single reading.
Frequently asked questions
What is the difference between MA and EMA?
MA gives equal weight to all prices of the selected period; EMA gives more weight to recent prices and therefore responds faster to price changes. On the chart MA is distinguished by a blue line and EMA by a pink one.
Can I change the MA period?
Indicator periods are fixed on Paribu; there is no period setting in the app. You can only turn indicators on and off.
Is the price being above the MA a buy signal?
Not on its own. The price staying above the average shows that buying pressure is strong, but this is not enough for a buy decision. It is recommended that it be assessed together with volume, momentum indicators and price structure.
Can I use MA and EMA at the same time?
Yes. When you turn both on at the same time, you see two average lines over the chart, one blue and one pink. This lets you follow the short-term and long-term tendency together.
Related articles
- What is EMA (exponential moving average)? — An average weighted towards recent prices
- What are technical indicators and how do you use them? — Adding and removing indicators
- What is RSI (relative strength index)? — Momentum and overbought zones
- What are Bollinger Bands (BOLL)? — Volatility bands
- What is a candlestick chart? — Candle structure and candle types
Author:
Paribu