UNDERSTANDING TRENDS - CRYPTO ACADEMY/S5W1 - HOMEWORK POST FOR @reminiscence01
I feel very blessed to be the fifth season to participate. I hope to learn more important things from this season. So without further due let’s move on to the main question answer episode.
a) What do you understand by a Trending market?
We usually mean a market where there will be buyers and sellers and some products. There will be a transaction between the buyer and the seller where we call it a market. There are usually three types of conditions in the market. First of all, the price of a product in the market may increase several times more than before. Otherwise the price of a product may be several times lower than before. Another thing we notice in the market is that the price of any product fluctuates a little bit and so on.
In the first situation in the market we found that if the price of a product continues to rise then it is called uptrend. Thirdly, when the price of a product continues to rise, this condition is called downtrend. When this does not happen the price of one of the fixed prices fluctuates we call it sideaway market. These three conditions of market fluctuations are called market trends.
What is a bullish and a bearish trend? (screenshot required)
Bullish Trend
The two most used word in cryptocurrencies market are bullish and bearish. After bearish trend, generally we get bullish trend. When the market is constantly up for some period of time, we call the situation bullish trend. We did a bullish moment in Shiba Inu a few days ago due to some of the fundamental good news of this token. The most comfort zone for a trader is Bullish moment for trading. One of picture of bullish trend given below.
Bearish Trend
The opposite trend of the bullish trend is the bearish trend. In other words, the trend we usually get after a bullish trend at a certain time is a bearish trend. When the market continues to go down, that is, the price of a product goes down, the situation is called downtrend. Downtrend is a curse to a holder but it is the natural behavior of the market. A picture of downtrend given below.
Explain the following trend identification and give an example of each of them. (Original screenshot needed from your chart). Do this for a bullish and a bearish trend.
Market Structure
The term used to describe the overall condition of the market is market structure. Or we can say that market structure give us the knowledge about general information. From the information a trader gets an idea about market.
Bullish trend from market structure.
I have discribed earlier that bullish trend refers the continuous goes up market for some period of time. Here two types of situation we found first one is Higher High and Higher Low formation. When we will see the formation it means that the price of product is increasing. And the a trader take the advantage of bullish trend by opening buy long position. A screenshot of bullish trend.
Bearish trend from Market structure.
The bearish trend can be determined from the market structure in the same way we identified the bullish trend. The type of formation we will see here is Lower high and Lower low patterns. In the condition, price of commodity fluctuates little bit up and goes down higher then previous market price. A trader can take the profit from the flactuation also.
Trendlines
It is very important for a trader to know support and resistance. By the trandline we can show support and resistance level very easily as a result a trader can set up entry and exit position. It will be very clear by giving example with screenshot.
Bullish Trendline
I have taken ETHUSDT pair to understand trendline. As we know that in support area holder choose an asset for buying. The trendline giving us the idea for bullish trend.
Bearish Trendline
Here in the resistance area I have drawn a trade line from which the market price had to bounce back again. We have understood the next situation in the market from the trend line.
Explain trend continuation and how to spot them using market structure and trendlines. (Screenshot needed). Do this for both bullish and bearish trends.
We can take a little idea from the trendline and the market structure and how much the market price can fluctuate in a rang of the price. If we look at the screenshot below, we can see the structure. If such a structure appears, a bullish trend is usually noticed in the market. That's exactly happened in this screenshot.
We can see in the figure below that lower low and lower high market structures have been created. Such a structure usually gives us a glimpse of the bearish trend. After this structure we can see bearish trend. So we can say that by the market structure and trendline a trader can spot market.
Pick up any crypto-asset chart and answer the following questions -i) Is the market trending? ii) What is the current market trend? (Use the chart to back up your answers).
I have chosen a coin from the trading view . The coin is BAKE. I have taken a screenshot of current candle of BACK/USDT pair. There was no big up and down in the market. It's creating sideaway market. That is why we can say it is not trending market.
If we look very carefully in the picture we will get the fluctuations of candle in support and resistance level. It is not pump hardly as well as not dump hardly. So we can say that the market is not trending.
Conclusion
To become a trader, I must have a good idea about market trend. In the lesson the Professor highlighted pros and cons of market trend by his educative lesson. If a trader can understand market trend properly he will be profitable on the other hand if he open trade against market trend, in the situation he may fall into losses. That is why, as a new or beginner trader have to acquired knowledge about market trend.