KNOWLEDGE BASE · CRYPTO INDICATORS
What are crypto indicators and how do you use them?
Crypto indicators turn price, volume and trading data into measurements that help structure market analysis. They can describe momentum, trend, volatility, trading activity or the position of the current price within a recent move. On Markets Understood you can use crypto indicators for EUR spot markets on Bitvavo and Kraken and compare several timeframes side by side.
The most important point is that an indicator is not a prediction. A high RSI, a rising EMA or a positive MACD describes data that already exists, but it cannot guarantee what the next candle will do. Indicators are most useful when they are used to organise market context and compare different types of information.
What is a technical indicator?
A technical indicator is a calculation based on historical or current market data. Depending on the indicator, it may use closing prices, highs and lows, volume or different types of averages. The result is usually shown as a number, line, band or relative position.
Indicators can broadly be divided into several groups. Trend indicators help describe direction and structure. Momentum indicators measure the speed or strength of a move. Volatility indicators show how widely price is moving. Volume and activity measurements help assess how much trading is taking place behind a price move.
RSI: speed and strength of price movement
The Relative Strength Index, usually called RSI, compares recent positive and negative price movement. Its value normally ranges between 0 and 100. A high RSI means positive movement has been relatively strong during the measured period, while a low RSI reflects stronger negative movement.
Levels around 70 and 30 are often used as reference points for markets that have moved strongly upward or downward. They should not be treated as automatic reversal levels. During a strong trend RSI can remain high or low for an extended period. Trend, volume and timeframe therefore remain important.
EMA: giving more weight to recent prices
An Exponential Moving Average gives recent prices more weight than older prices. This allows an EMA to react more quickly to new price movement than a simple moving average.
Markets Understood uses measurements such as EMA20 and EMA50 as additional market context. Price above or below these averages, and the relationship between shorter and longer averages, can help describe recent structure. A moving-average crossover by itself does not guarantee that a new trend has started.
MACD: combining momentum and trend context
MACD stands for Moving Average Convergence Divergence. It compares moving averages and shows whether the distance between them is increasing or decreasing. This can help identify changes in momentum.
A strengthening positive MACD may fit with increasing positive momentum, while a declining value may show that momentum is weakening. Its interpretation becomes more useful when price structure, volume and higher timeframes point in a similar direction.
VWAP: price in relation to traded volume
VWAP stands for Volume Weighted Average Price. Unlike a simple price average, VWAP gives greater weight to prices where more volume was traded. It therefore provides context about the average price at which meaningful trading activity occurred within a period.
The current price being above or below VWAP can add context, but it should not be used in isolation. Not every exchange or market always provides usable VWAP data. Markets Understood only displays VWAP when the underlying feed supports it and does not invent a value when suitable data is unavailable.
ADX: how strong is a trend?
The Average Directional Index, or ADX, focuses on trend strength rather than direction. A higher value can indicate a stronger trend, while a lower value is more common in markets with limited directional movement.
This distinction can be useful because two markets may both be rising while one is moving far more consistently than the other. ADX can help expose that difference when viewed alongside price structure and momentum.
Bollinger Bands and volatility
Bollinger Bands consist of an average with upper and lower bands that respond to recent volatility. When price movement becomes larger, the bands can widen. During quieter periods they may contract.
Price touching an upper or lower band is not a standalone trading instruction. The bands mainly show where the current price sits relative to its recent range and volatility. That can help assess whether a move is unusually large or still within a normal recent range.
Stochastic: position within the recent trading range
The Stochastic Oscillator compares the current price with the highest and lowest prices over a recent period. It therefore describes where price is positioned within that range.
Like RSI, Stochastic can remain high or low during a strong trend. It is generally more useful as supporting context than as a single trigger for a decision.
ATR: how much does a market normally move?
ATR, or Average True Range, measures the average size of recent price movement. It focuses on volatility rather than direction. A higher ATR fits with larger candles and wider fluctuations, while a lower ATR reflects a quieter market.
This matters because a one percent move may be exceptional for one coin but routine for another. ATR helps put the size of a move in relation to that market's recent behaviour.
Volume, volume acceleration and momentum
Price movement often becomes more informative when trading activity changes at the same time. Markets Understood therefore considers volume, momentum and volume acceleration alongside price movement. Volume acceleration describes whether trading activity is increasing relative to an earlier period.
A fast price move accompanied by increasing activity represents a different market situation from the same price move in a thinly traded market. It still does not guarantee continuation, but it adds useful context.
Buy pressure is not the same as a buy wall
Buy pressure in MU refers to executed trading activity. It describes how much recent activity occurred on the buying side. A buy wall is different: it is visible but unexecuted liquidity resting in an order book.
The distinction matters because an order in the book can be changed or removed, while an executed trade has actually taken place. Both may provide information, but they describe different market behaviour.
Support, resistance and free space
Recent support and resistance areas can also matter when interpreting indicators. Support is an area where price previously found buying interest, while resistance is an area where upward movement previously struggled. Markets Understood uses such levels as additional market context.
Free space describes the relative distance toward a relevant market level. It does not predict that price will travel through that space. Its purpose is to prevent a strong short-term move from being viewed without considering nearby market structure.
Why multiple timeframes matter
The same market can look completely different across timeframes. A coin may rise strongly on 5 minutes while the 1-hour structure remains weak. A quiet 5-minute candle may also sit inside a clear 4-hour move.
Markets Understood therefore supports 5M, 15M, 1H, 4H and 1D. Comparing timeframes helps reveal whether indicators support one another or contradict each other. A move confirmed across several timeframes provides different context from a move that exists only on the shortest timeframe.
Read more in 15m versus 1h in crypto analysis.
Why data freshness matters
An indicator is only as current as the market data used to calculate it. In thinly traded markets the latest candle may be older than expected. A technically correct RSI calculated from an old candle can therefore be less relevant to the current market situation.
Markets Understood marks stale market data and prioritises fresh markets by default. Before interpreting a coin, it is useful to check whether the underlying candle and recent trades are sufficiently current. Read more about crypto market data freshness.
Why Bitvavo and Kraken are analysed separately
BTC-EUR on Bitvavo and BTC-EUR on Kraken represent the same underlying asset and quote currency, but they are not exactly the same market. Volume, spread, liquidity, participants and trade timing can differ between exchanges.
MU therefore keeps exchange data separate. A move visible on both exchanges provides different context from activity that is concentrated on only one platform. See Bitvavo versus Kraken for EUR spot for more background.
How do you combine indicators without creating too much noise?
More indicators do not automatically create better analysis. Many indicators are derived from the same price data and may therefore repeat similar information in a different form. It is usually more useful to combine indicators from different categories.
For example, you can first review price structure and timeframe, then look at trend through EMA, momentum through RSI or MACD, activity through volume and buy pressure, and volatility through ATR or Bollinger Bands. This builds context layer by layer instead of treating ten separate values as ten separate signals.
A practical Markets Understood workflow
Suppose a coin stands out on the Crypto Heatmap because of a strong price move and relatively high EUR activity. The first question is not whether the coin will continue higher. A better first question is whether the move is visible on other timeframes as well.
You can then open the market in Indicators. Check whether volume is accelerating, how RSI and MACD are developing, where price sits relative to EMA and VWAP and whether support or resistance is nearby. Then compare 5M, 15M, 1H and, when useful, 4H.
Contradictory readings are also useful information. A strong 5M move inside a weak 4H structure is a different market situation from broad confirmation across several timeframes. MU is designed to make those differences easier to see.
Common mistakes when using indicators
One common mistake is treating a threshold as an absolute rule. RSI above 70, for example, does not mean a market must fall. Another mistake is looking only at the shortest timeframe. Short timeframes react quickly, but they also contain more noise.
A third mistake is ignoring data freshness. A convincing indicator value has limited use when the underlying market has barely traded for hours. Stacking many similar indicators can also create a false sense of confirmation.
From market activity to structured analysis
A logical MU workflow starts broadly. Use Market Activity and the Heatmap to discover where something is changing. Then investigate one market through Indicators. Check exchange, timeframe, data freshness, price structure, momentum, volume and volatility.
If you later want to structure a possible scenario, continue to Trade Plans. Markets Understood does not decide whether you should buy or sell. The tools are designed to organise information and make market context easier to understand.
Summary
Crypto indicators are most useful when they are not treated as standalone predictors. RSI, EMA, MACD, VWAP, ADX, Bollinger Bands, Stochastic, ATR, volume and other market measurements each describe a different part of the same market.
Combining different types of indicators, several timeframes, fresh data and exchange-specific information provides a more complete picture. That is the role of the Markets Understood Indicators tool: not to tell users what to do, but to make the available market data easier to examine.
Return to the Markets Understood Knowledge Base for more information about EUR spot markets, market activity and the MU tools.