Crypto Academy Season 4 | Intermediate course by @allbert –week 1: Trading with Strong, Weak and Gap Levels.

in SteemitCryptoAcademy10 months ago
Hola mis Crypto Gears!!!, for me it is an honor and a great joy to share with you again a new season of Steemit Crypto Academy.

Personally, I do not consider this place as a privilege but as a responsibility to all of you.

For this first week of this new season, I wish to continue with the study of topics that were left pending in the last season as well as to deepen even more what I have learned.

For this reason, I have decided to start this week with an even deeper study regarding strong and weak levels, and other types of liquidity levels.


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Image edited by me in Powerpoint

At this point, everyone should know how to recognize supports and resistances, which is one of the most basic and simple concepts to understand in trading. But what would you say if I told you that there are different types of supports and resistances... some more reliable than others?

Strong supports and resistances.

When we talk about strong and weak levels we are referring precisely to supports and resistances that behave strongly or weakly. This characteristic of strength or weakness is marked by the level of reliability of support or resistance and the ability to influence the behavior of an asset, or in other words ability of certain levels to repel the price of the asset.

When a level repels the price several times, we are in the presence of a strong level.

From a graphical point of view, a strong level is an imaginary horizontal line with which the price constantly interacts. In fact, the way to recognize a strong level is to observe which resistance or support makes the price bounce several times. In addition, a strong resistance can later become support or a strong support resistance.


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Strong Levels Source

From the market's point of view, these levels are actually popular price zones where large amounts of pending buy or sell orders accumulate, which provide liquidity to the market.

Once the price reaches these levels, the pending orders are activated, triggering a reaction where large amounts of money move, and consequently modifying the price trend.

Weak supports and resistances.

On the other hand, a weak level refers to a type of support or resistance line that is not very reliable.

Graphically it can be visualized as a level that bounces the price on one or two maximum occasions, but then is easily broken by the price.


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Weak & Strong Levels Source

From the market point of view, these levels correspond to areas where there are also pending buy or sell orders, but this time in smaller quantities and much lower volume.

For this reason, when the price touches these levels, the liquidity makes the price react in the opposite direction, however, they are quickly exhausted... For this reason, when the price passes through the same level again, as there are no more pending orders, the support and resistance are simply broken.

Supports are influenced by pending buy orders. Resistance is influenced by pending sell orders. The level of strength of these resistances and supports will depend on the amount of buy or sell orders and the volume in the market.

What is a Gap?

As the name suggests, these are jumps made by the price, skipping certain levels and positioning itself immediately on others without passing through the immediately preceding ones.

. Graphically it is represented as blanks where the opening of a new candle does not correspond to the closing of the previous one.


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Image edited by me in Powerpoint

From a practical point of view, these Gaps are generated when there is a sudden market movement resulting from an entry (buy/sell) with a large volume. For this reason, Gap levels represent important supports or resistances to taking into account in our operations.

Types of Gap, and its functions.

Breakaway Gap

For now, it will be the most functional for us. It is the type of gap that occurs as a breakout of a lateral movement structure or previous trend.


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Image taken from Tradingview Source

It indicates the beginning of a new trend and represents a strong resistance or support level.

Runaway Gap


These are gaps that occur when the trend is still young and represent a trend continuation indicator.


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Image taken from Tradingview Source

However, they are not very practical as they are difficult to identify, mainly because they are often confused with the following ones.

On the other hand, if they are correctly identified, because they are in the middle of a trending market, their level can also be considered an important resistance or support.

Exhaustion Gap


It occurs near the end of a trend indicating the last impulse. It is very difficult to identify as it is often confused with the Runaway Gap and can only be identified once the movement has passed.


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Image taken from Tradingview Source

In this type of gap, the level is not very important, since the price will generally seek to fill the gap. For this reason, this gap is traded in the opposite direction, as the price is expected to return and reclaim the levels omitted in the gap.

Due to these characteristics, and for this class, we will trade with the support and resistance levels generated in the Breakaway Gap, which are the easiest to identify.

How to trade with Gap and Strong levels.

Both types of levels (Strong and Gap Levels) can be traded using a simple strategy such as the BRB, where we first look for a breakout of the support or resistance line.

Then a pullback and a restest or bounce at the claimed level is expected.


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Image taken from Tradingview Source


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Image taken from Tradingview Source

In the case of a breakout of a strong level, the entry (buy/sell) is established at the swing point, and a stop loss is set just at the expired support or resistance.

The take profit is set following a Risk/reward ratio = 1/1 or 1/2.

In the case of the Gap level, you can choose to make the entry at the end of the next long candle in the direction of the new trend, setting the stop loss at the gap level. This strategy can be used in case you consider yourself a risky trader.


9.png
Image taken from Tradingview Source

If you rather consider yourself cautious, you can choose to use also the BRB strategy and wait for the price to make a pullback and retest the level of the Gap. In which case the stop loss would also be placed at the Gap level and the take profit is set following the Risk/reward ratio = 1/1 or 1/2.

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CONCLUSION

Although we are in the presence of a very simple strategy, if it can be mastered, very good results can be obtained in a short time. Due to the simplicity of identifying support and resistance the success rate for novice traders is high. In fact, many experienced traders still use these simple methods in their trading.

The heart and soul of this strategy are knowing how to correctly identify strong and important supports within the price chart. In this step lies most of the success rate, because if they are misidentified, it will naturally be impossible to forecast price movements accurately.

Finally, although this method works well on its own, it never hurts to accompany it with other indicators such as the MACD, RSI, or ADX which can help confirm trends.

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Homework Task (Season 4/Week-1)

Before starting your answers this week, make sure you have read this publication at least twice and make your own research to understand the concepts.

1- Graphically, explain the difference between Weak and Strong Levels. (Screenshots required) Explain what happens in the market for these differences to occur.

2-Explain what a Gap is. (Required Screenshots) What happens in the market to cause It.

3- Explain the types of Gap (Screenshots required, it is not allowed to use the same images of the class).

4- Through a Demo account, perform the (buy/sell) through Strong Supports and resistances. Explain the procedure (Required Screenshots).

5- Through a Demo account, perform the (buy/sell) through Gaps levels. Explain the procedure (Required Screenshots).

Guidelines

  • Be Original!!! Refrain from copy any else posts and ideas. Be creative. The content is certainly the same, but the way of presenting it is unique.

  • Your article should be at least 400 words.

  • Refrain from spam/plagiarism. Plagiarism of any kind won't be tolerated.

  • This task requires screenshot(s) of your own experience, add a watermark on it with your username. Also, use images from copyright-free sources and showcase the source, if any.

  • This homework task will run from 00:00 September 6th to 23:59 September 11st, Time UTC. (7:59 pm hora Venezuela)

  • Users having a reputation of 60 or above, and having a minimum SP of 400 (excluding any delegated-in SP) are eligible to partake in this Task. (Must not be powering it down)

  • Please don’t leave your homework link on the comment section unless your post hasn’t been graded within 48 hours.

  • If you have any doubts about Homework Task, feel free to join the comment section

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Cc:-

@steemitblog

@steemcurator01

@steemcurator02
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 10 months ago 

Hi, Professor @albert

I really Work Hard because i need to take participate in Advanced Level Homework Now, I am also not able to do intermediate Homework My Level is 58.95 please Tell Me How can i goes to Level 60.

cC:

@allbert

You can do Power Up My friend. But also You can take begginer class.

 10 months ago (edited)

Professor Now My Level is 59 Now i am able to do this Homework??

Screenshot_20210906-091726.png

Will i powerup 50 steem than i am able to do your Homework?

Come on mate!!! Rules are Rules... Its 60, not 59.

 10 months ago 

ok professor

 10 months ago (edited)

Los usuarios que tengan una reputación de 60 o más y que tengan un SP mínimo de 400 (excluyendo cualquier SP delegado) son elegibles para participar en esta Tarea. (No debe apagarlo)

la temporada pasada mi querido profesor yo hacia tarea con usted en nivel intermedio y a hora modificaron esa pauta me puede explicar lider

Hola amigo. Estas son las nuevas pautas que la coordinación nos ha dado para esta temporada.

 10 months ago 

Pls do you mean we shouldn't drop our home work
Post link on the comment section like we do initially unless its not graded after 48hrs?

Yes I mean that. Don't worry, I'm always cheking your homeworks!!! You really don't need post the links here. I want this section be for doubts only

Hola profesor tengo una duda, no es tomado en cuenta las delegaciones que yo realice a otras comunidades??? saludos

No hay problema con tus delegaciones. El problema es si te delegan a ti para poder completar el SP.

Hello professor @allbert I just have a question.
About the trade are we to trade for both support and resistance level or either of the two

I think you mean question 4. You are free to do trade just one. The important factor is that the resistance or support you choose has to be a STRONG LEVEL.

In question 5. The same. The important factor is that the resistance or support you choose has to be a GAP LEVEL.

Oh thanks sir that has answered my question I really appreciate

 10 months ago (edited)

Professor, how can we found the gaps in normal charts (Binance, tradingview, etc). As I have searched some charts and I am not able to find the Gaps. @allbert

yes you can. As I said before... gaps are like holy grail... you don't find them anywhere

 10 months ago 

Thank you so much Prof @allbert for this great lecture.

I have a question on Question 5.

For gap trading, is simulation allowed?
Because, gap is not easily found.

I await your response.

Thanks.

Simulate the purchase... (demo account) the gap must be REAL.

 10 months ago 

Hello prof., from this question of yours

Through a Demo account, perform the (buy/sell) through Gaps levels. Explain the procedure (Required Screenshots).

Can we just select any type of the gap and use it to perform the demo or we are to use the three types of gaps to perform the operation

 10 months ago 

He has answered this already. See

I think you mean question 4. You are free to do trade just one. The important factor is that the resistance or support you choose has to be a STRONG LEVEL.
In question 5. The same. The important factor is that the resistance or support you choose has to be a GAP LEVEL.

Thank you.

You can use any gap my friend, Although Exhaustion Gap doesn't work so much because they have a pullback later to fill the space the gap left behind. So it doesn't respect the gap level.

Its good to be back professor @allbert.

I read your post comprehensively but was unable to understand one thing.

It is the type of gap that occurs as a breakout of a lateral movement structure or previous trend.

If you could pls explain it a bit more to me, Id be grateful.

Thank you

in trading we can see that sometimes patterns or structures form, lateral movement, pennants, wedges, flags. When the price breaks out of those patterns it is called a breakout and it can signify the beginning of a new trend ... this is the holy grail for traders. These types of gaps occur when one of these structures that I mentioned breaks

Thank you professor

Honestly I did not have an idea about these, but after reading this and observing this on chart I understood what did you mean by holy grails. Excellent strategy professor.

I'm glad to hear that my friend. That is my mission, that you can learn something new, and use those things in your trading.

professor @allbert I am so sorry to disturb you again and again but I have a rather big confusion here. I have tried to find gaps on every crypto asset on my tradingview account on every time frame but I am still not able to locate them. Is there any way of doing that? I see many other students have submitted their assignments and they have successfully located gaps. I do not want to miss out on this assignment, if you could guide me through it, I would be grateful.

Well mate, I cannot tell You the answer, but I can tell You that try to search in not common crypto, in low time frames.

I also used an indicator to help me out. If You detail all My screenshots you'll find out.

Thank You so much Prof. My assignment will be on the way shortly.
Saludos

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