Crypto Academy / Season 3 / Week 4 - Homework Post for @cryptokraze | Dynamic Support & Resistance

in SteemitCryptoAcademy3 years ago

Dynamic Support and Resistance's Definition

We can know about them as those ones that organically they get created throughout the chart according to the current behavior of the market with the help of an offset line like an Exponential Movement Average (EMA), which can serve as a good reference no matter if it's uptrend or downtrend but they are more precise that horizontal segments. Easier to predict due to the rejection of price that use to do towards this line, acting like a dynamic resistance when it's above the candles or like a dynamic support when it's below of them, just take a look on the following image of a BTC-USDT pair from Binance exchange (1 hour frame).


Picture from Binance platform edited by InShot app


Finding Supports and Resistances with EMA indicators

Because the less number to set in the EMA, the more sensitive with the price would be the built line characterized by this indicator, so we can find excellent sources of signals through the use of two EMA lines (for instance, 50 and 200 length with purple and yellow color respectively), according to the next described situations:

📈Dynamic Supports for Buy Scenario

The EMA lines are useful for this case due to the fact of acting like a magnetic ones that price go down from above to stick them by often but then get back uptrend immediately in a swing movement, without crossing further both lines. Then, by this way we can be sure to set the dynamic supports when they are approaching and getting touched each other.


15 minutes pair of DASH-BNB from Binance exchange

📉Dynamic Resistances for Sell Scenario

The EMA lines are useful for this case due to the fact of acting like a magnetic ones that price go up from below to stick them by often but then get back downtrend immediately in a swing movement, without crossing further both lines. Then, by this way we can be sure to set the dynamic resistances when they are approaching and getting touched each other.


15 minutes pair of BTC-USDT from Binance exchange


Trade Entry and Exit Criteria

🔺For Long position

In a bullish trend of the chart, It's necessary to wait until the EMA lines are below the price (acting like dynamic supports) but the 50 length one must be above to the 100 length and starting to get touched by candles and then go up enough to avoid an invalid entry by an unexpected change of price direction.

Once this happened, we can make the buy entry with a Stop Loss located a bit below to the 200 length EMA line (in yellow) and calculating adequately a RR of 1:1 or 1:2 in order to exit with a sell order from the market.


Long position for the 15m pair of DASH-BNB from Binance exchange

🔻For short position

In a bearish trend of the chart, It's necessary to wait until the EMA lines are above the price (acting like dynamic resistances) but the 50 length one must be below to the 100 length and starting to get touched by candles and then go down enough to avoid an invalid entry by an unexpected change of price direction.

Once this happened, we can make the sell entry with a Stop Loss located a bit above to the 200 length EMA line (in yellow) and calculating adequately a RR of 1:1 or 1:2 in order to exit with a buy order from the market.


Short position for the 15m pair of BTC-USDT from Binance exchange


Demo trades for dynamic supports and resistances

🔺For Long position

At the 30 minutes BTC-USDT pair from Binance in Trading View website, I was monitoring the price until I saw it touching the dynamic support level of 32.030 provided by the 50 length EMA in purple, so I waited for a bullish and a little separation from that line in order to make a Buy Entry order at 32.120 , with a RR setting of 1:1 (Stop Loss of 31.680 according to the 100 length EMA in yellow and a calculated Profit). Then, a Sell Exit order of 32.560 was executed to take it with success.

🔻For short position

At the 30 minutes TWT-BTC pair from Binance in Trading View website, I was monitoring the price until I saw it touching the dynamic support level of 0.00000932 provided by the 50 length EMA in purple, so I waited for a bearish and a little separation from that line in order to make a Sell Entry order at 0.00000925 , with a RR setting of 1:1 (Stop Loss of 0.00000935 according to the 100 length EMA in yellow and a calculated Profit). Then, a Buy Exit order of 0.00000915 was executed to take it with success.


👷🏻‍♀️>>~•Alegn@•~>🎶

The pictures belongs to the Binance and Trading View platforms, where they were taken by a Xiaomi Redmi7A device in Venezuela.

*** See you in next post *** 📝

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Dear @alegnita

Thank you for participating in Steemit Crypto Academy Season 03 and making efforts to complete the homework task. You got 9/10 Grade Points according to the following Scale;

CriteriaGrade Points
Presentation Style2/2
Content Quality & Originality1.5/2
Understanding of Strategy3.5/4
Practical Approach2/2

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Key Notes:

  • Your homework presentation style is very good and I would suggest you to keep following it.
  • In question no 02, you have used 50 and 200 EMAs combination which are too far away and will not give good setups. You should have used a bit closer combinations. 200 EMA would give too large stop loss level simply.
  • You have shown good understanding of the strategy by making precise charts for different elements of the strategy.
  • In the last question, I wanted to see if students picked this strategy. You have placed trades according to trade criteria.
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We appreciate your efforts in Crypto academy and look forward for your next homework tasks.

Regards
@cryptokraze

 3 years ago 

Thank you dear professor. This is my best grade I've got so far. 🤩 I've read that many traders use 200 for the EMA indicator, but you're right. I noticed this line a bit away from price. I'm using the combination of 50 and 100 in my trades from now on. Thank you once again for informative lessons. #venezuela #affable

You are welcome

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