Ethereum 50-Day and 200-Day Moving Average Chart

Whether you are using the ETH 50-day or 200-day moving average chart, the method of calculation and the manner in which the moving average is interpreted remain the same.

The Ethereum moving average chart simply represents an arithmetic mean of a certain number of ETH closing prices. The only difference between the ETH 50-day moving average chart and the ETH 200-day moving average chart is the number of time periods used in the plotting. The ETH 50-day moving average is calculated by summing up the past 50 ETH closing prices and then dividing the result by 50, while the ETH 200-day moving average is calculated by summing the past 200 days and dividing the result by 200.

As the question implies, many technical crypto traders use these averages to aid in choosing where to enter or exit a position, which then causes these levels to act as strong support or resistance.

Moving averages (MA) are often viewed as a low-risk area to place transactions since they correspond to the ETH average price that all crypto traders have paid over a given time frame. For example, the ETH 50-day moving average is equal to the average price that all investors have paid to obtain the asset over the past 10 trading weeks (or two and a half months), making it a commonly used support level.

Similarly, the Ethereum 200-day moving average chart represents the ETH average price over the past 40 weeks, which is used to suggest a relatively cheap price compared to the price range over most of the past year. Once the price falls below this average, it may act as resistance because individuals who have already taken a position may consider closing the position to ensure that they do not suffer a large loss.

Critics of technical analysis say that Ethereum moving average charts help to understand support and resistance because so many crypto traders use these indicators to inform their trading decisions.