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Best Indicators for Cryptocurrency CFDs

Reading time: 10 minutes

This article will provide professional traders with in-depth information about the best indicators for trading cryptocurrency CFDs. We'll explore the application of the Camarilla indicator, support & resistance levels, the Admiral Markets Pivot, the MACD indicator and MACD patterns, and much more!

Cryptocurrency Indicators

There are numerous types of pivot point indicators available in the world of trading, for instance, Fibonacci, and Murrey Math. Cryptocurrency indicators are no different. What works for you in other markets, should, in theory, also work with cryptocurrencies. One of the best indicators for cryptocurrency is Camarilla. We might consider Camarilla to be one of the best cryptocurrency technical indicators for the following reasons:

  • It identifies support and resistance
  • It helps with determining the trend
  • It adds confluence to our charts
  • It shows the bullish and bearish zones of the day and the week
  • It spots triggers
  • It provides clear entry and exit points

When you take a look at the Camarilla indicator, you will see even more key benefits for you as a trader such as:

  • Levels that are generated automatically each trading day
  • It fully supports pre-fact analyses, which are performed daily
  • It is clear and concise
  • The chart stays simple with Camarilla lines

BTC/USD, H4 chart, Admiral Markets MT4 platform, Nov 2017- Jan 2018

Source: MetaTrader 4 - BTC/USD H4 chart - Data Range: 12 Nov, 2017 - 6 Jan, 2018

Simply put, the Camarilla indicator provides well-respected, simple, and automated levels of support and resistance. Camarilla is also used by some bank and institutional traders. We can easily identify levels of support and resistance, and here's how:

  • W L3 – Weekly Camarilla Pivot (Weekly Interim Support)
  • W H3 – Weekly Camarilla Pivot (Weekly Interim Resistance)
  • W H4 – Weekly Camarilla Pivot (Strong Weekly Resistance)
  • D H4 – Daily Camarilla Pivot (Very Strong Daily Resistance)
  • D L3 – Daily Camarilla Pivot (Daily Support)
  • D L4 – Daily H4 Camarilla (Very Strong Daily Support)

Occasionally, you might see D L1, D Cm, and D H1. Those are the very first levels of support and resistance (D Cm being the pivot point for the day). The H3 and L3 are range levels. The price is in range or consolidation when it's in between the H3 and L3 levels. Traders can use these levels as a break or bounce level.

Some professional traders advise others to always try and look at the higher time frame, then look for a breakout if a trend is visible on a higher time frame. Traders look for a bounce if a range is visible on a higher timeframe. The H4 and L4 are the first breakout targets. The price is in a breakout when it manages to break below the L3 or above the H3.

The first initial target is the L4 and the H4. Traders can either take profit there, or they can wait for the higher target at H5 and L5. The H5 and L5 are the second breakout targets, meaning that the second and the last target for a breakout is the L5 and H5 . Traders who missed the first breakout can attempt to join the breakout after the price hits the H4 or L4, upon a pullback or a second breakout. Camarilla levels are the primary source of the confluence that traders look for when analysing and trading.

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Manually Drawn Historical Levels of S/R

What is Support & Resistance?

Support & Resistance (S&R) levels are a basic pillar of technical analysis (TA). The field of TA is based on patterns within price data, and S&R plays a key role here. Learning how to understand, recognise, use, and trade based on S&R may help to make your analysis and trading more robust on the top cryptocurrency CFDs.

Sounds good right? but what is S&R? The simplest way to think about support and resistance is this: They are price levels or price areas wherein the price changes direction or moves sideways. In other words, S&R is a price level or a price zone where the price bounces.

Support & Resistance Explained

Support levels are always found below the current price. They indicate buying pressure, and they offer a potential bullish bouncing spot or a bearish breakout. Resistance levels are always found above the current price. They indicate selling pressure, and they offer a potential bearish bouncing spot or a bullish breakout.

ETH/USD, H4 chart, Admiral Markets MT4 platform, Dec 2017- Jan 2018

Source: MetaTrader 4 - ETH/USD H4 chart - Data Range: 5 Dec, 2017 - 8 Jan, 2017

We wrote 'potential bounce or break' above, but how high is this chance? That depends on both the strength of the S&R and the confluence (multiple levels). But be aware that price reactions tend to be strong on higher time frames. Cryptocurrency market analysis should be much stronger when the correct S&R indicators are applied.

S&R remains valid when the price is reversing or bouncing at the S&R:

  • Bullish bounce: the price is bouncing at the support
  • Bearish bounce: the price is bouncing at the resistance

S&R becomes invalid when the price manages to break through it:

  • Bullish breakout: the price is breaking through the support
  • Bearish breakout: the price is breaking through the resistance

Once the S&R is broken, their role can turn around like this:

  • Broken support becomes a potential new resistance level
  • Broken resistance becomes a potential new support level

Examples of S&R levels include: tops, bottoms, and round levels, but this article will dive into more examples and which ones we might use later on for cryptocurrencies.

Why Are Support & Resistance Levels Important?

S&R levels are a key part of any market analysis or chart for a number of reasons, including:

  • Respected: the market uses S&R levels for breakouts and bounces
  • Big market players: every technical analyst uses S&R (also traders at banks and funds)
  • Universal: they appear on all instruments and time frames
  • Market phases: they appear during trends, ranges, and reversals
  • Time frames: higher time frames are more important, as a larger part of the market uses these levels
  • Path of price: S&R are key in understanding the "path of least resistance"

S&R levels can be compared to the footprints of the big market players. Other traders can understand their moves better if they analyse S&R.

Admiral Markets Pivot

Technical analysis S&R levels are presented uniquely and exclusively via the Admiral Markets Pivot indicator. It is also used as S&R Bitcoin technical indicator. Admiral Pivot is the professionally coded indicator for trading the financial markets. We use it for:

  • S&R scalping
  • S&R breakouts
  • S&R zones
  • S&R basic indicators

Its uniqueness comes from a modifier that you can find in the indicator properties.

Source: Admiral Pivot Indicator - MetaTrader 4 Supreme Edition add-on

It allows you to select any of the nine different timeframes that you can watch within the current time frame. For example, you can trade the 5-minute chart with the H1 pivot points attached to the chart. Additionally, you can customise the indicator to your liking via additional options located within the indicator properties.

MACD and MACD Patterns

When we apply 5,13,1 instead of the standard 12,26,9 settings, we can get a visual representation of the MACD patterns for cryptocurrency CFD signals. These patterns could be applied to various trading strategies and systems as an additional filter for taking trade entries. Many professional traders think that the best MACD setting for a MACD pattern is 5,13,1. So how do traders analyse cryptocurrency CFDs? They try to follow these MACD patterns:

MACD Bullish SHS

This is a Bullish SHS (Inverse Head-and-Shoulders pattern) that marks a reversal and a possible uptrend turn. Possible entry is made after the pattern has been completed, at the open of the next bar.

MACD Bearish SHS

This is a Bearish SHS pattern (Head-and-Shoulders) that marks a reversal and a possible uptrend turn. A possible entry is made after the pattern has been completed, at the open of the next bar.

MACD Bearish SHS

MACD Bullish Continuation

A Bullish continuation pattern marks an upside trend continuation. First, the MACD makes a downside turn from point A, marking a retracement. Subsequently, when point A is broken by the MACD histogram, it presents a signal for a long entry.

MACD Bullish Continuation

MACD Bearish Continuation

A Bearish continuation pattern marks an upside trend continuation. First, the MACD makes an upside turn from point A, marking a retracement. Subsequently, when point A is broken by the MACD histogram, it displays a signal for a short entry.

MACD Bearish Continuation

MACD Bullish 0 Line Rejection

When the MACD comes down towards the 0 line and turns back up just above the 0 line, it is normally a trend continuation move. Points A and B mark the uptrend continuation.

MACD Bullish 0 Line Rejection

MACD Bearish 0 Line Rejection

When the MACD comes up towards the 0 line and turns back down just below the 0 line, it is normally a trend continuation move. Points A and B mark the downtrend continuation.

MACD Bearish 0 Line Rejection

We hope that you enjoyed reading this article, and gained a greater understanding of the best indicators to use trading cryptocurrency CFDs. So what's next? Join millions of traders who already started their trading journey, performing successful cryptocurrency CFD market analysis. Open a demo trading account and enjoy risk-free trading before you transition to the live markets.Don't waste any more of your time! Join millions of traders who already started their trading journey, doing successful cryptocurrency CFD market analysis. Open a demo account and enjoy risk-free trading. See it in action! Click the banner below to open your FREE demo trading account today!

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.