Technical Indicator Explanations
Understanding the indicators used in this dashboard can help you make more informed decisions. Below you will find brief explanations of each technical indicator used. These descriptions are provided for educational purposes and do not constitute financial advice.
Relative Strength Index (RSI)
The relative strength index is a momentum oscillator that measures the speed and magnitude of price movements on a scale from 0 to 100. Values above 70 may indicate an overbought market, while values below 30 may point to an oversold market. An RSI reading near 50 suggests that gains and losses are roughly balanced.
Moving Average Convergence Divergence (MACD)
The moving average convergence divergence indicator consists of the difference between two exponential moving averages and a signal line. When the MACD and signal lines sit above zero the market is considered bullish, whereas readings below zero may indicate bearish conditions. Crossovers of the MACD line above or below the signal line are commonly interpreted as potential buy or sell signals.
Stochastic Oscillator
The stochastic oscillator compares a security’s closing price to its recent trading range to gauge momentum. Readings range between 0 and 100; values above 80 are typically considered overbought and values below 20 oversold. Traders often look for reversals when the %K and %D lines cross.
Bollinger Bands
Bollinger Bands consist of a middle line—usually a 20‑day moving average—and bands two standard deviations above and below it. When the bands widen, volatility is rising; when they narrow, volatility is falling. Prices near the upper band may be overbought, while prices near the lower band may be oversold.
Average Directional Index (ADX)
The average directional index was developed by Welles Wilder as part of the directional movement system. It does not tell you whether prices are rising or falling; instead, ADX measures the strength of a trend. It is calculated from smoothed averages of up‑ and down‑directional movement and plotted on a scale from 0 to 100. Readings below roughly 20 suggest that the market is not trending, while readings above 25 or 50 indicate increasingly strong trends regardless of direction.
Commodity Channel Index (CCI)
The commodity channel index is an oscillator created by Donald Lambert. It measures how far an asset’s price has deviated from its statistical mean. CCI oscillates above and below a zero line; high positive values indicate prices are well above their recent average (potentially overbought), while low negative values indicate they are well below their average (potentially oversold). Traders often watch for CCI to cross +100 or −100 to signal trend strength and possible reversals.
Money Flow Index (MFI)
The money flow index combines price changes with trading volume to gauge buying and selling pressure. MFI calculates a typical price for each period, multiplies it by volume to produce money flow, and then compares the ratio of up–volume to down–volume. It oscillates between 0 and 100: readings above 80 are considered overbought and below 20 oversold. Divergences between MFI and price can foreshadow potential reversals.
On‑Balance Volume (OBV)
On‑Balance Volume is a cumulative indicator that relates price movement to volume. For each period, the day’s volume is added to a running total if price closes higher or subtracted if it closes lower. Rising OBV confirms buying pressure and falling OBV suggests selling pressure; when OBV diverges from price it can signal weakness in the prevailing trend.
Average True Range (ATR)
The average true range measures market volatility. It is derived from the true range, defined as the greatest of the following: the current high minus the current low, the absolute value of the current high minus the previous close, or the absolute value of the current low minus the previous close. ATR is a moving average of this true range. It does not indicate direction; instead, higher ATR values indicate greater volatility, which traders use to set stop losses or position sizing.
Relative Vigor Index (RVI)
The relative vigor index compares the closing price to the asset’s trading range. In essence it measures how far the close is from the open relative to the entire range. RVI is often smoothed and plotted alongside a signal line. Values above the centerline indicate bullish momentum, while values below it indicate bearish momentum. Crossovers between the RVI and its signal line are used as trading signals, and divergences between RVI and price can suggest impending reversals.
Rate of Change (ROC)
The rate of change indicator expresses the percentage change between the current price and a price from a set number of periods ago. It oscillates around zero: a positive value means prices have risen over the lookback period, and a negative value means they have fallen. ROC can be used to spot overbought or oversold conditions when it reaches extreme positive or negative values, and crossovers through the zero line can signal shifts in momentum.
How the Forecast Model Works
The projection shown above is based on a geometric Brownian motion (GBM) Monte Carlo simulation. In a Monte Carlo simulation a model is applied to many random trials to produce a range of possible future outcomes. GBM, one of the most common financial models, assumes that price returns follow a random walk with a constant “drift” plus unpredictable shocks. Under this model, short‑period returns are normally distributed and multi‑period price levels are log‑normally distributed.
To generate the forecast, the server estimates the recent average (drift) and volatility of log returns for the selected cryptocurrency. It then simulates dozens of potential price paths into the next 24 hours using these estimates and aggregates them to form a median trajectory and percentile bands. The shaded band on the chart represents the 25th–75th percentile range of those simulated paths, giving a sense of plausible variation rather than a single deterministic outcome.
It’s important to recognise the limitations of this approach. Monte Carlo tools treat returns and volatility as random variables defined by user‑specified inputs such as expected return, standard deviation and correlation. Those assumptions have a considerable impact on the results, and outcomes at the extremes may not be precise. Forecasts derived from simulations are only estimates—they cannot predict the future with certainty. You should view these projections as illustrative scenarios and always conduct your own research and consider broader market factors before making investment decisions.