Using technical indicators for cryptocurrency trading, the core logic is simple: don't rely on the "one-sided story" of a single indicator, but use multiple indicators to "corroborate" each other (resonance), while being alert to "divergence" between indicators and price (discrepancies). Combine this with risk management to improve trading success rate. Here's a plain-language breakdown of the main points:

1. Understand "Trading Tools": What can common technical indicators do?

Just like driving requires coordination of the steering wheel, accelerator, and brake, trading also has several core "tools," each with its own role:

Moving Average (MA/EMA): The "compass" for the big picture. A short-term line (like 5-day) crossing a long-term line (like 20-day) is called a "golden cross," which may signal a buy; the opposite "death cross" may signal a sell. It can also help identify support and resistance — when prices rise and dip back near the moving average, it may stop falling; when prices rebound to the moving average during a decline, it may face resistance.

MACD: The "engine" showing the "momentum" of the trend. The key signals are "golden cross" (fast line crossing above slow line) to buy, "death cross" to sell. Above zero indicates strong momentum, below zero indicates weakness. Longer bars mean trend strength is increasing; shorter bars suggest possible reversal.

KDJ: The "alarm" for whether the price is "crazy bullish" or "oversold." Values above 80 indicate "overbought" (may pull back), below 20 indicate "oversold" (may rebound). Golden cross to buy, death cross to sell, but in extreme conditions, it may "fail," so it should be combined with other indicators.

RSI: Similar to KDJ, used to judge overbought/oversold conditions and can also signal trend reversals early. Above 50 favors bulls, below 50 favors bears.

2. Core Techniques

1: Multiple indicators "resonate" for reliable signals

A single indicator can deceive you (e.g., KDJ suggests buy, but it's a false signal), but when multiple indicators agree, the reliability doubles — this is "resonance." For example: the trend line shows an upward trend (big picture), MACD shows a golden cross (momentum), RSI recovers from oversold territory (deep correction), all three signals suggest "buy," which is more reliable than relying on just one. Indicators should be confirmed across different timeframes: if the daily chart suggests buy, and the 4-hour chart also supports it, it's more robust, filtering out short-term noise. Also, watch the volume: when buy signals appear, volume should increase (everyone's buying), indicating a strong trend; if volume shrinks, it might be a false signal.

2: Beware of "divergence," an early warning of trend reversal

"Divergence" occurs when price and indicators move against each other. For example: top divergence — price hits a new high, but MACD or RSI doesn't confirm with a new high, or even declines — indicating upward momentum is weakening, possibly leading to a fall; bottom divergence — price hits a new low, but indicators don't confirm with a new low and instead rise — indicating the decline is exhausted, and a rebound may occur, so be prepared to buy the dip. Divergence should be confirmed with at least two indicators (e.g., MACD and RSI both show top divergence), and combined with volume (shrinking volume at a top divergence, increasing volume at a bottom divergence) to increase the probability of reversal.

4. How to operate in practice? Risk control is essential

Knowing how to read signals isn't enough; you also need to know when to enter and how to protect profits: Entry points: prioritize "resonance signals" — for example, moving average golden cross + MACD golden cross + RSI oversold recovery, combined with price breaking key levels (trendlines, resistance), which gives a high probability of success.

Stop-loss and take-profit: don't be greedy or stubborn. Set stop-loss near the start of divergence or resonance (e.g., for bottom divergence buy, place stop-loss below the lowest point during divergence) to avoid large losses; take-profit can be staged — for example, sell 30% at the target, and let the rest follow the trend.

Position management: when signals are strong, buy more (e.g., split into 3 batches for building positions), when signals are weak, buy less; in high leverage trading, risk per trade should not exceed 1%-2% of total capital to prevent liquidation.

Pitfall avoidance: avoid using standard indicators in extreme market conditions (like flash crashes or surges), as they may fail; for altcoins with high volatility, adjust indicator parameters (e.g., shorten RSI period) to reduce false signals.

Summary

Cryptocurrency trading methodology: Use indicators like MA, MACD, KDJ, RSI as "tools," rely on "resonance" to find reliable buy/sell opportunities, use "divergence" to warn of risks, and employ position sizing, stop-loss, and take-profit to protect principal and profits. The core is "not putting all eggs in one basket, but verifying with multiple signals to increase certainty."