Special thanks to @allbert for the wonderful lecture. Below is my homework task.
Graphically,explain the difference between Weak and strong levels. (Screenshots required) Explain what happens in the market for these differences to occur.
Strong level of support and Resistance
This is when a trend reversal has occurred recently in a price level. When an uptrend occurs in the price of an asset and suddenly begins to move in a downtrend, at that price point where such occurred is known as the strong level of resistance. Wherever an uptrend begins in other to end a downtrend in the price of an asset is known as a strong level of support. There is always a struggle for a break through when the price of an asset comes to a good resistance or support area,this occurs in other for the price to move back in the other direction. A strong level occurs when there is lots of bid and ask in the market, as a result of this, there is a continuos fluctuation in the price of an asset,both the buyers and sellers have a firm hold to the market. For a strong resistance and support level to occur,there has to be lots of bounce in price before it goes back to its price continuation in any of the levels. Most traders see the strong support and Resistance level as reliable levels in other to initiate a trade.
Weak levels of Resistance and support
It is one in which a trader cannot depend on both the resistance or the support and this is as a result of both the resistance and support being rear to be noticed. The weak level cannot recover from a reversal more than twice. Weak levels occur in a market where one party over shadows the others. It is not like the strong level where there is lots of liquidity where there are lots of buyers and sellers. The weak levels of support and Resistance is common in most crypto charts.
Explain what a Gap is. (Required screenshots) what happens in the market to cause it.
Its the space formed when an asset price opens below or above that of the previous days price,and there was no record of price in between the movement. The gaps can be used to show either the beginning or end of the trend of a market. One of the factor that leads to gap is as a result of negative or positive news, which stirs traders to buy large quantity or sell off Large quantity of an asset.
Explain the types of Gap (screenshots required,it is not allowed to use the same images of the class).
It usually moves with respect to the recent trend,i.e it continues to follow the direction of the recent trend at that time,which could be either bearish or bullish. It usually occurs when there is a high execution of trade in a market.
It is one that results in an extension in price movement as a result of it occurring at the end of a trend. It is one that is good to be used for a trade, but it can be deceitful for new traders. Just as it was stated in the class, trading with exhaustion gap should be in an opposite direction,as a way of expecting sentimental change in the market.
It is one that occurs when there is a space in price either below the support or above the resistance. A breakaway gap is usually seen early and in usually in a new trend. Most buyers usually depend on the Breakaway gap when initiating a trade.
Through a Demo account,perform the (buy/sell) through strong supports and resistance, Explain the procedure(required screenshots)
It's always important to identify a strong resistance level that has to break out and retest before setting your long position. Therefore, from the chart, I found a breakout from a strong resistance level that has breakout as well as retested before it continues its upward movement. So using Break Retest Break(BRB) strategy, I set my buy entry just above the new swing high created after the price was retested. It is very important to place an exit, so I placed my take profit above the break which is at the range of 13.067 while my stoploss is below the strong resistance level. I get a profitable trade I used risk to reward ratio of 3:1.
Looking at the chart above the trade hits my take profit.
Through a Demo account, perform the (buy/sell) through Gap levels. Explain the procedure (Required screenshots).
The presence of a gap could indicate a trend reversal because gaps appear when there is a significant change in the market, particularly in market psychology. According to the chart above, a gap formed around 14.20. With the gap present, I entered the market at 0.63495438 and set my stop loss at around 0.63600000. The market exit point was around 0.63800000, which allowed the trade to be closed profitably. It was critical to set the stop loss at a point where I would not be at a loss if the trade did not go as planned, so the stop loss was set slightly above the entry price as shown above.
Special thanks to @allbert for the wonderful lecture. Using of these technical tools will be helpful during trading.