In the digital currency market, especially in Bitcoin trading, technical analysis is an indispensable tool. Bitcoin's 120-day moving average (MA120) is a common technical indicator that is often used by investors to determine market trends and price movements. This article will explore the mechanism and application of Bitcoin's 120-day moving average, as well as how to use this indicator to make smarter investment decisions.

The Bitcoin 120-day moving average refers to the average price of Bitcoin over the past 120 days. The calculation method of this indicator is relatively simple, but the meaning behind it is extremely far-reaching. The core idea of the moving average is to smooth out price fluctuations and help investors identify more lasting price trends. By averaging prices within a certain time frame, investors can filter out short-term market noise and see the long-term trend of prices more clearly.

First, it is important to understand how Bitcoin's 120-day moving average is calculated. Specifically, MA120 adds up the daily closing prices of the past 120 days and then divides it by 120. As time goes by, the earliest price data will be replaced by new data, and this calculation method allows the moving average to dynamically reflect the latest trends in the market. It is worth noting that MA120 reacts relatively slowly, which means it is more suitable for identifying long-term trends rather than short-term fluctuations.

In actual operation, the application of MA120 can help investors determine the timing of buying or selling. When the price of Bitcoin breaks through MA120, it is usually regarded as a buy signal. Conversely, when the price falls below MA120, it may mean a sell signal. The logic behind this strategy is that when the price breaks through the moving average upward, it indicates that the market sentiment tends to be optimistic, and vice versa, it may indicate that the market sentiment turns to pessimism.

However, relying solely on MA120 to make trading decisions is not comprehensive enough. Many successful investors will combine other technical indicators for comprehensive analysis. For example, MA120 can be used in combination with indicators such as the relative strength index (RSI) and Bollinger Bands to obtain a more accurate market judgment. RSI can help investors determine whether the market is overbought or oversold, while Bollinger Bands provide the range of price fluctuations. By combining these indicators, investors can have a more comprehensive understanding of market dynamics, thereby increasing the probability of investment success.

In addition, market sentiment plays a vital role in Bitcoin's price fluctuations. The Bitcoin market is known for its high volatility, and investor sentiment often affects price trends. For example, during the Bitcoin price surge in 2017, many investors rushed into the market for fear of missing out, causing prices to soar further. However, this irrational behavior can also lead to drastic price fluctuations, ultimately leading to a market correction. Therefore, when using MA120, investors must always remain rational and avoid being swayed by market sentiment.

When analyzing Bitcoin's 120-day moving average, the impact of the market environment on its effectiveness cannot be ignored. For example, during a bull market, MA120 may generate a relatively accurate buy signal, while in a bear market, the effectiveness of this indicator may be greatly reduced. Therefore, when formulating trading strategies, investors need to flexibly adjust their investment strategies based on the overall market trend and environmental changes.

To better understand Bitcoin's 120-day moving average, we can look at a few real cases. For example, in March 2020, Bitcoin prices experienced a sharp drop due to the COVID-19 pandemic. During this period, the trend of MA120 lagged significantly behind price changes, causing some investors to miss the best buying opportunities when the market rebounded. In 2021, Bitcoin prices continued to rise, and MA120 successfully captured this upward trend, providing investors with an effective buy signal.

Another case worth noting is that in May 2021, the price of Bitcoin suffered a major correction. During this period, the trend of MA120 was relatively stable and failed to reflect the sharp fluctuations in the market in a timely manner. This shows that although MA120 is an effective long-term trend judgment tool, its reaction speed and accuracy may be affected under extreme market conditions. Therefore, when relying on this indicator, investors need to conduct a comprehensive analysis based on multiple factors.

In actual trading, how can we effectively use MA120 to improve the accuracy of investment decisions? First, investors can set a clear trading plan, including entry and exit strategies. For example, when the price of Bitcoin breaks through MA120, a reasonable stop loss point can be set to prevent unexpected market fluctuations. In addition, investors can also regularly review their trading records, summarize lessons learned, and optimize their trading strategies.

Secondly, it is also very important to maintain sensitivity to market dynamics. Investors should pay attention to Bitcoin news, policy changes, and other external factors that affect the market. For example, changes in a government's regulatory policy on Bitcoin may have a significant impact on the market. In this case, MA120 may not be able to reflect market changes in a timely manner, and investors need to respond quickly based on market information.

It can be said that MA120 is not just a number, it contains the market sentiment and trend. Through a deep understanding of this indicator, investors can better grasp market opportunities and make more wise investment decisions. At the same time, maintaining a mentality of learning and adapting to market changes will enable investors to remain invincible in a volatile market.

In the Bitcoin investment journey, MA120 is an important tool that cannot be ignored. It not only helps investors identify trends, but also provides a relatively objective basis for market analysis. However, no technical indicator is foolproof, and investors need to remain vigilant and flexibly use a variety of tools and strategies to cope with the complex and changing market environment. In this rapidly developing digital currency era, only by continuous learning and adaptation can we remain invincible in the wave of investment.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

The 120-day moving average of Bitcoin is the dividing line between the bull and bear markets in the digital currency market. The 120-day moving average of Bitcoin is actually very good-looking. Once the price falls below the 120-day moving average, everyone can think that the market has entered a bear market, and all currencies can be cleared and rested. In the bull market, when the closing price is above the moving average, buy or go long; in the bear market, when the closing price is below the moving average, sell or go short. In fact, in addition to the 120-day moving average of Bitcoin, there are many medium moving averages in the market, such as the 5-day moving average, the 10-day moving average, the 20-day moving average, etc. Many investors want to know how to read the 120-day moving average of Bitcoin? Let the editor of the currency circle explain this Bitcoin 120-day moving average technique in detail.
 How to read Bitcoin’s 120-day moving average?
The view of Bitcoin's 120-day moving average is very simple. Just refer to the above picture and select the time below the chart to see the Bitcoin market trend within 120 days. When the Bitcoin price is above the 120-day line, it is a bull market, otherwise it is a bear market. Go long in a bull market and go short in a bear market. The operating standard is to choose any moving average (the 30-day lifeline is recommended) as the trading standard. If the closing price is above the moving average, buy or go long, otherwise sell or go short.
 Bitcoin's six main moving averages
Attack line: that is, the 5-day moving average. The 5-day line strategy mentioned by the first public account in the currency circle, Kuang Ren, refers to this moving average. Its main function is to push the price to form an attacking trend in the short term and continuously guide the price to rise or fall.
Trading line: that is, the 10-day moving average. Its main function is to push prices to continue to rise or fall in a round of intermediate band market.
Auxiliary line: 20-day moving average. The main function is to assist the trading line. In fact, the main reason for adding a moving average is that the gap from the 10-day line to the 30-day line is too large.
Lifeline: 30-day moving average. This line is very important. Mu Niu has a "lifeline strategy", which refers to the buying point based on the 30-day moving average. The main function of the lifeline is to indicate the medium-term trend of the price, which is the life foundation of a large-scale rise or fall.
Decision line: 60-day moving average. The main function of the decision line is to indicate the mid-term reversal trend of the price and guide the price to run in the established trend at the large-band level. Once the decision line turns downward, you must unconditionally clear your position and leave the market.
Trend type: 120-day line. In the currency circle, it is actually the bull-bear conversion line. Once the price falls below the 120-day line, we can think that the market has entered a bear market and all currencies can be liquidated and rested.
The above is the detailed explanation of how the editor of Coin Circle views Bitcoin's 120-day moving average. Cryptocurrency and stock markets are usually forward-looking. This means that traders tend to ignore recent negative factors and focus on future positive factors. Independent market analyst Rekt
Capital highlighted this unique market dynamic, noting that Bitcoin rallied 234% and 316% in the year before the past two halving events, in 2015 and 2019. If history repeats itself, Bitcoin’s price action could surprise in 2023, though, uncertainty remains in the short term.