What Technical Indicators Are Often Cited by “Herding” Traders during a Crypto Sell-Off?
Herding traders often rely on simple, widely-followed technical indicators that reinforce the collective selling narrative. Common indicators include the breach of major support levels, such as key moving averages (e.g.
200-day MA). A rapid drop in the Relative Strength Index (RSI) below 30 signals an "oversold" condition, which paradoxically can trigger more selling as traders anticipate further downside.
Volume indicators showing a surge in selling volume also confirm the collective action.
Glossar
Key Moving Averages
Trajectory ⎊ Key Moving Averages represent a foundational element in discerning trend direction and potential momentum shifts within cryptocurrency markets, options trading, and financial derivatives, functioning as smoothed price data points that mitigate short-term volatility.
Fibonacci Retracement Levels
Level ⎊ Fibonacci Retracement Levels are horizontal lines drawn on a price chart at key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) to indicate potential areas where a price pullback may find support or resistance before continuing the original trend.
Technical Indicators
Derivation ⎊ Technical indicators, within cryptocurrency, options, and derivatives, represent quantifiable assessments of historical price and volume data intended to forecast potential directional movements or identify market conditions.
Volume Indicators
Indicator ⎊ Volume indicators are technical analysis tools that quantify the amount of an asset or derivative traded over a specific period, providing insight into the conviction and intensity behind price movements.
Relative Strength Index
Calculation ⎊ ⎊ The Relative Strength Index, within cryptocurrency, options, and derivatives markets, quantifies the magnitude of recent price changes to evaluate overbought or oversold conditions in the underlying asset.
Volume Weighted Average Price
Price ⎊ The Volume Weighted Average Price (VWAP) represents an average price of an asset, weighted by its trading volume over a specific period.