Crypto Academy Week 15 - Homework Post for [@yohan2on]. The Swing trading style

Greetings Professor @yohan2on. For today's assignment, I confess that I am a bit nervous and anxious because, in my opinion, the moment of truth has arrived. The moment to demonstrate in practice all the tools we have learned in class during the last weeks.

Naturally, it is still a test, but personally, this shows me at what level of knowledge I am.

So, Let's start.

_{Image edited by me in Powerpoint}

Swing trading development

My selected pair is (Polygon) MATIC/USDT. Polygon is an ecosystem that I have been studying lately, which is in constant development and growth. At the time I started my analysis (Wednesday, May 26th, 9 pm Venezuela time) its cryptocurrency "MATIC" was around 2.07USDT. When reviewing the graph at different timeframes I found the following results.

1- One-month time frame: Uptrend, In this timeframe I marked the historical High with a blue horizontal line at 2.69USDT.

_{MATIC/USDT chart, 1M. Image edited by me and taken from my Tradingview account ^Source}

2- One-week time frame: Uptrend, in this time frame I mark two lines (red color) of support and resistance at 0.37 and 0.81.

_{MATIC/USDT chart, 1W. Image edited by me and taken from my Tradingview account ^Source}

3- One-day time frame: The pattern becomes more interesting, it is still in the main uptrend, however, we noticed a small drop. Previously the price suffered a fall but rebounded at the level of 1.08. Just at that point, I establish a support line in pink.

_{MATIC/USDT chart, 1D. Image edited by me and taken from my Tradingview account ^Source}

4- Four-hour time frame: The pattern is an uptrend, but begins to form structures. In this time frame, I find a new support level at 1.78 (black line). I also see a bearish trend starting, which I will confirm in a lower timeframe.

_{MATIC/USDT chart, 4H. Image edited by me and taken from my Tradingview account ^Source}

5- One-hour time frame: Finally, I can clearly see a confirmed bearish trend in this time frame. I establish a support line at 2.10 (green line) which will serve as confirmation to the price will go up or down.

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

If the 2.10 level is confirmed as support, everything would indicate to me that the price will continue to rise to its historical high of 2.69, otherwise (as was the case) the price would enter a small downtrend before meeting the 1.78 support and rising again.

Actually, within this time frame, I can notice a flag pattern with which I confirm my suspicions. I am of the opinion that the 1.78 level will be a trend change point from bearish to bullish, continuing the general trend of the higher time frames. So I believe at that point it is a good area to buy.

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

At this point, I activated the MACD indicator (Fast: 12, Slow:26). In this way, I observe that the MACD line is about to touch the zero line, which indicates a change of trend reaching the support point of 1.78.

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

As a last confirmation to set my entry, stop loss and take profit points I use the Fibonacci Retracement tool. Taking as a starting point the lowest point of the green candle that started the upward momentum (1.54), up to the historically high level (2.69).

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

When doing this the first thing I notice is that the 0.786 Fibonacci level coincides perfectly with my support taken in 4 hours time frame (1.78). This confirms that 1.78 will be my entry price to set BUY stop.

On the other hand, I could place a stop loss at 1.54, however, I will place a tighter stop loss at 1.63 support (purple line).

I will set take profit at its historical high of 2.69, and trailing stop loss at 2.10.

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

Trade management

-Buy stop: 1.78

-Stop loss: 1.63

-Trailing Stop: 2.10

-Take profit 1: 2.34

-Take profit 2: 2.69

Later I could move the trailing stop to the level of 2.34 (dotted cyan line). In fact, I have studied that some traders do not set take profits, but constantly move the trailing stop. This is not my case.

A curious fact is that the percentage of loss of my stop loss is 8.27%, while the percentage of gain up to the first trailing stop is 17%, fulfilling the 1:2 risk-reward ratio.

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

Finally, I will have a profit percentage of 31% up to take profit 1 and 50% up to take profit 2.

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

_{MATIC/USDT chart, 1H. Image edited by me and taken from my Tradingview account ^Source}

CONCLUSION

In Swing trading, we have to be very attentive to the past behavior of the price of the asset, as this will set the future trend.

In my particular case, although I set my exits and entries in a 1-hour timeframe, in reality, I set the strong support and resistance lines in higher timeframes such as monthly and 4 hours.

It is true that you cannot foresee the future, but the Swing trading style teaches that there are always more possibilities to find a reaction in the market in those levels where it has already reacted in the past.

As a final comment, I must say that I find more affinity with this type of trading than with scalping.