Hello everyone. This week lecture is all about the basic of crypto world. I learn to know the meaning and usage of many basic things like "trend" in deep. Moreover, the bearish and bullish season has been also discussed. Here I am going to write my homework task for professor @ lenonmc21.
1.Define in your own words what is "Trend" and trend lines and what is their role in charts?
Whenever we talk about making investment in crypto world, we always first look at the market trend. We analyzed the market through multiple methods like sometime we perform technical analysis and sometime we prefer fundamental analysis. The purpose is to predict what will be the next trend in market. This help us in making the market decisions. Moreover the charts and trading view of coin also let the user to get an idea about which trend is running right now in market. So the term “trend” matter a lot in crypto world and we oftenly used it. What the Trend meaning in actual?
In General, the term Trend refer to the change. In crypto world, the trend meaning the direction of market. The direction where the market is moving or growing is known as the trend of market. The market trend is change when the price of coin Is fluctuate. The ups and down in price causes the market up and down trend. In simple words, the trend is the movement of price. Wherever the price of coin will move, the market trend will change accordingly.
Role of Trend in chart
The trend shown where the market is moving. This show the direction of market. The trend can be upward or downward. After indicating the trends, the people decide whether to enter into the market or it is good time to leave the market.
Downtrend: If price is falling downward, the market is in downtrend. The market move toward down in downtrend. The downtrend is good to buy the coins.
Uptrend: If price is moving upward, the market is in uptrend. The market move upward in uptrend. The uptrend is good to sell the coins
The trend lines are used to show in which direction, the market is growing. These are the lines which are used in chart to define about the market trend. Trend line move downward if price of coin is low. And if the price is rising, then the trend line will be moving upward.
Multiple terms are used while drawing the trend line. The support and resistance level is used to determine what will be the next market trend.
The trend lines play a very significant role in chart. The traders get the idea about the market next move while seeing these trend lines. They make the important market decisions with help of these lines in chart. The trend lines in chart help the investors to determine whether they should make an entry or should leave the market.
- Trendlines are use to determine the direction of market
- The trendline helps the trader to get the idea about where the price is moving(upward or downward)
- The higher high and lower low points are used while drawing the Trend lines.
- The trend lines are used to determine the the entry or exit spot.
- The trend lines define the market situation and trend thoroughly.
Role of trend lines
Trend lines are use to indicate that how much fall or rise is there in price. Moreover, it show the strength of trend. The investors get help about the market movement and take important crypto decisions. This line help the investors to predict that where the market will move next and how strong the trend will be.
We know that in uptrend, the price rise. The demand increase which eventually cause a rise in price of coin. The resistance trend line is drawn on the chart where the price of coin stop rising and start falling. This is the point where the uptrend stop.
The price of coin is fall in market downtrend. The price decrease which increase the supply ratio and decrease the demand of coin. But there is a point when price stop falling anymore. The support
Question 2: Explain how to draw an uptrend line and a downtrend line (Show a screenshot of each).
The crypto market is highly volatile. The trend change continuously. If the market is at uptrend right now, after some time, the market will start falling and downtrend will start. No trend is for permanent. There are two type of trend in crypto market; Uptrend and Downtrend.
When the market move upward, the market is said to be in uptrend. When the price of coin is low, the investors buy the coins at that time and enter into market. The demand of coin increase, the price of coin also increase which decrease the supply ratio. In this case, the market uptrend occur. The investors buy the coins at low price in market downtrend. With their investment, the price rise and market bull period start there. The uptrend is also known as bullish period.
And if market was in downtrend, then there will be high low and higher-high points while moving upward. To draw an uptrend, There must be more than two higher-high point in the chart. You just match all the higher-high points and draw a line. In this way, the uptrend line is drawn.
When the market move downward, the market is said to be in downtrend. When the price of coin is rise and reach to maximum point, the investors consider this a good spot to leave the market. The investors sell there coins which they had purchased in market downtrend at low price. Thus they generate the good profit. The market price then started falling and demand
ratio also decreases. The supply ratio become high and market downtrend occur there. The downtrend is also known as bearish period.
When a trend change, it doesn’t change in a straight line. If market was at uptrend, then there will be some low high and lower-low movements while trending downward. To draw a downtrend, there must be at least two lower-high and lower-low points. You just match the lower-high point with each other and draw a line. In this way the downtrend line is drawn.
3. Define in your own words what "Supports and Resistances are and how we can identify both zones (Show a screenshot of each one).
The downtrend start when price of coin start falling. The price decrease and a point come when price stop falling anymore. This is the support level. At this point, the price stop falling. When the price is decreases, the people start investing in the coin. This is the point when people are expected to stop selling the coins. Because coins price fall and selling coins at this spot is lose of money.
This is the average fall spot in coin price. The support level is best time to buy the coins. There are some price fluctuations in market downtrend. The price fall, rise and thus some lower-high and lower- low points occur. The support level indicate the average fall in price in market downtrend. The price is very low at these points.
The uptrend start, when price of coin start rising. The price increase and reach to the level when it stop rising anymore. They increment in price is stop at that point. When the price is increases, the people start selling the coins to earn the high profit. This is the point when people are expected to stop purchasing the coins because this is consider the exit point. Because coins price increase and selling coins at this spot is to earn money.
The market reach on the top, there are some fluctuations. There are some higher-high and higher-low spots. The average maximum price is the resistance level.
What are simple chart patterns and how can we identify them?
The simple chart is the graphical representation of market trend. This is use to define where the market is growing. This graphical representation is use to determine the movement of price and this information is use by the traders to take decisions whether to make an investment or to exit the market. The chart help the trader in successful trading. Multiple types of charts are there which the users use to predict the market next movement. I will explain the Wedge and Head and Shoulder.
There are ups and down in market. This chart is drawn when the price fall and rise very closly. Here two trend lines are used to draw the wedge. A series is make up here when two trend lines are drawn in the chart to show the fall and rise in price. This price movement can be upward or downward.
If price is rising then two upward trend lines will be used and if price is falling then two downward trend lines will be used. You can read more about the wedge from this link
Head and Shoulder
This type of chart is use to show that the market is trending downward. When the uptrend end and downtrend started, the head and shoulder chart is use to define the market trend. Here there is a high low point. Then a higher high point and then a lower high point. A peak point is surrounded by two small peak points. The first one is toward upward and third one is toward downward. The mid one is the peak of uptrend.
The trendlines are discussed in detail in this homework. The uptrend and downtrend are explained with help of screen shorts. I tried to answere all the questions in easy way. I am thankful again to professor @lenonmc21