Crypto Academy Season 5 Week 2- Recognizing Simple Patterns in Trading - Homework Post for @sachin08
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Hey Everyone!
I have learned about the most famous chart patterns in this course, which include triangles and flags. All thanks to @sachin08 for teaching Steemit Community with trading knowledge. Further, there’s a series of questions and I have answered each of them by learning from the professor’s course.
1. What is your understanding about Triangles in Trading. Explain all forms of triangles in your own words. (Screenshot required)
1. What is your understanding about Triangles in Trading. Explain all forms of triangles in your own words. (Screenshot required)
There are several ways of trading, but the most common method is through chart patterns. It helps the trader to find out what will happen next in the market and take trade according to the observation. Out of all the famous patterns, the traders widely consider triangle as it represents bullish and bearish signal. There are only 3 triangle patterns that are symmetrical, ascending, and descending.
Now, I will explain each one so that you can fully understand how they look like and how to trade using them:
Symmetrical Triangle
As we know, triangles can be bullish and bearish based on their structure, but the symmetrical triangle shows a neutral sign. It is made up of 2 lines that are support and resistance, and the price ranges between those lines. Since we don’t know where the price could be headed, we must wait for the proper break from the triangle to trade.
I found a symmetrical triangle in AVAX/USDT, and you can see that the market structure became bullish once its upper line (RESISTANCE) was broken.
Ascending Triangle
The ascending triangle gives the signal to open a long position on a commodity. It also consists of 2 lines. The first one is the horizontal line that is resistance and the second rising line works as a support. The price breaks through the first line and starts an uptrend.
I have drawn an ascending triangle in the BNB/USDT chart, and you can see that the price started a strong bullish trend once it broke the support line.
Descending Triangle
As the name suggests, the descending triangle is a bearish pattern that the price of crypto will start a downtrend once it breaks from the triangle. It consists of a horizontal resistance line and a declining support line. In this triangle, the prices break the lower support line and start a downtrend.
I found a descending triangle on MATIC/USDT and you can see that the price started a bearish move after breaking down.
2. Can we also use some Indicators along with it Triangle Patterns? Explain with Screenshots.
2. Can we also use some Indicators along with it Triangle Patterns? Explain with Screenshots.
Yes, I like to use several indicators based on their purpose with chart patterns. Many indicators like MA, EMA, Bollinger Band, RSI, and others give us a great insight into the price action based on their past data. Therefore, it can help with trading because if indicators and triangle patterns shares the same view of the market, then you can easily take a trade without any worry.
I will show you an example of trade using a triangle pattern and RSI to show that it is good to use both chart patterns and indicators.
A descending triangle was formed by DOT/USDT, which shows a bearish trend. I used a technical indicator that is called RSI and found a bearish divergence which also supports downtrend. Therefore, pattern and indicator helped me with trading as both were giving a short signal.
3. Explain Flags in Trading in your own words and provide screenshots of both Bull Flag and Bear Flag.
3. Explain Flags in Trading in your own words and provide screenshots of both Bull Flag and Bear Flag.
Next to triangles, flags are also famous chart patterns that give bullish and bearish trade ideas. It forms after a strong direction to either downtrend or uptrend and shows that the price of a specific crypto coin will continue the trend. There is a total of 2 types of flags that are known as bull flags and bear flags. Let’s observe each one in-depth with examples from the market:
Bull Flag
When the price starts a strong uptrend movement and consolidates for a moment, then a bull flag will be formed. It is made of a pole with a support and resistance line. Once the price breaks, it will once again start a strong bullish move which is an ultimate long signal.
The BUY/USDT started an uptrend after ranging for a while and formed a bull flag which is a trend continuation pattern. Later, the price breaks the resistance, retests the line, and starts its bullish move.
Bear Flag
As you know, that bull flag gives a long position signal, bear flag, on the contrary, gives a sell signal. It is formed during a bearish trend and shows that the price of a commodity will continue the bearish trend after breaking out from the flag.
The KDA/USDT started a strong bearish move and then formed a triangle in which the price consolidated for a while and breakdown. The price has continued its strong downtrend since that.
4. Show a full trade setup using these Patterns on any Cryptocurrency chart. (Ascending Triangle, Symmetrical Triangle, Bear Flag)
4. Show a full trade setup using these Patterns on any Cryptocurrency chart. (Ascending Triangle, Symmetrical Triangle, Bear Flag)
I have learned to take trade by using various triangle and flag patterns from this course. Now, I will show the complete setups of ascending triangle, symmetrical triangle, and bear flag, including stop-loss price and take profit price. So, let’s start with ascending triangle.
Ascending Triangle Setup
The ascending triangle is a bullish pattern that gives a long signal once it breaks the support line of the triangle. I like to place a stop loss below the support line as the price always bounces from that area.
The candles of OMG/USDT formed an ascending triangle and broke the resistance line, which would have been my entry point, and then it went straight to my take profit price. The ratio of risk to reward was 1:5.
Symmetrical Triangle
In order to trade a symmetrical triangle, one has to wait for a breakout from any direction because it is a neutral pattern that can be either go bullish or bearish. So, I found that LINA/USDT was forming it, which later breakdown. I opened a short position with the ratio of 1:5 once it broke the lower line, and you can see that it hit my TP.
Bear Flag
As it has been mentioned earlier, that bear flag is a trend continuation pattern, so we have to find it during a strong bearish trend. I have marked a proper bull flag in the chart of SUSHI/USDT, and it also breakdown, which was my entry point with the ratio of 1:5. The price continued a strong downtrend and touched my TP.
5. Conclusion
The conclusion of my overall homework is that learning triangles and flags is important for every trader. These patterns are very easy to trade and give us a profitable signal. Additionally, applying some indicators with these patterns can also help us with accurate trading. I also express my gratitude to the professor for teaching these patterns to the fellow community.
Thanks For Visiting My Post
Cc: @sachin08
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