What exactly is a moving average? Simply put, it is the weighted average price of a cryptocurrency over a certain period. Connecting these average prices forms that line.

For example, the 5-day moving average refers to the weighted average price of the last 5 trading days. It sounds complicated, but the principle is very simple.

Moving averages provide support and resistance for the market. When the price is above the moving average, the line supports it; conversely, when the price is below, the line acts as resistance.

Here's an example to make it clear—suppose you have 5kg of copper, 2kg of paper, and 1kg of oil, with copper at 40 yuan/kg, paper at 20 yuan/kg, and oil at 5 yuan/kg. How do you calculate the weighted average price?

(5×40 + 2×20 + 1×5) ÷ (5+2+1) = 245 ÷ 8 = 30.625 yuan/kg

See it? The larger the quantity, the greater its influence on the weight. The item with the biggest weight has a bigger impact on the result. In this example, copper has the largest weight, so the average price tends to be closer to copper's price. The same principle applies in the crypto market.

When the market is good, watching your account balance grow steadily feels really satisfying. There’s always a bit of vanity—after all, who doesn’t want to drive a nice car, right? But the prerequisite is to learn how to read basic tools like moving averages first, so you can survive longer in this market.