Using technical indicators for cryptocurrency trading, the core logic is simple: don't rely on the "one-sided" opinion of a single indicator, but instead have multiple indicators "corroborate" each other (resonance). At the same time, be alert to indicators and price action "going against" each other (divergence). Combine this with risk management to improve your trading success rate. Here's a straightforward 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 Averages (MA/EMA): The "compass" for the big picture. A short-term line (like 5-day) crossing above 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. They can also help identify support and resistance — when prices rise and dip back near the moving average, it may stop falling; when prices bounce up to the moving average during a decline, it may face resistance.

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

KDJ: The "alarm" for whether the price is "going crazy" or "oversold." Values above 80 indicate "overbought" (may need a correction), below 20 indicate "oversold" (may rebound). Golden cross to buy, death cross to sell, but in extreme conditions, these signals may "fail," so they should be used with other indicators.

RSI: Similar to KDJ, used to judge overbought or oversold conditions, and can also signal trend reversals early. Above 50 indicates bulls are dominant; below 50 indicates bears are in control.

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 align, the reliability doubles — this is "resonance." For example: the trend line shows an upward trend (big picture is positive), MACD shows a golden cross (momentum is strong), RSI is recovering from oversold levels (deep correction), all three signals suggest "buy," which is more reliable than relying on just one. Also, combine same-period indicators with different periods for confirmation: if the daily chart suggests buy and the 4-hour chart supports it, the signal is more robust, filtering out short-term fluctuations. Pay attention to volume: when buy signals appear, volume should increase (more buyers), 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 the price and indicators move in opposite directions. For example: top divergence — price hits a new high, but MACD or RSI fails to reach a new high and even declines — indicating upward momentum is weakening, possibly leading to a fall; bottom divergence — price hits a new low, but indicators do not confirm the low and instead rise — indicating the decline is exhausted, and a rebound may occur, so be prepared to buy the dip. Divergence should not be judged by a single indicator; at least two indicators should show divergence together (e.g., MACD and RSI both diverge at the top), and confirm with volume (shrinking volume at a top divergence, increasing volume at a bottom divergence). The probability of reversal increases with confirmed divergence.

4. How to operate in practice? Also, implement risk control

Knowing how to read signals isn't enough; you need to know when to enter and how to protect profits: Entry timing: prioritize "resonance signals" — for example, moving average golden cross + MACD golden cross + RSI oversold recovery, combined with price breaking key levels (like trendlines or resistance levels). This increases the probability of a successful entry.

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-in, place stop-loss below the lowest point during divergence) to avoid large losses. For take-profit, consider scaling out: sell 30% at your target, and let the rest follow the trend.

Position management: When signals are strong, buy more (e.g., split into 3 batches for resonance); 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 periods) 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" as a warning of risk, and employ position sizing, stop-loss, and take-profit strategies to protect capital and profits. The core is "not putting all eggs in one basket, but verifying with multiple signals to increase certainty."