This tool determines the typical value of a digital asset over a specified period. It calculates this value by summing the prices observed within that period and dividing by the number of observations. For example, to find the average daily price of Bitcoin for a week, one would add the closing price for each of the seven days and divide the total by seven.
The resulting figure is important for traders and investors aiming to understand market trends and potential entry or exit points. By providing a smoothed representation of price movements, it mitigates the impact of short-term volatility and offers a broader perspective on asset valuation. These calculations can aid in identifying support and resistance levels, which are crucial for making informed trading decisions. Historically, such computations were performed manually, but automated tools now streamline this process.