Steemit Crypto Academy – Season 3 - Week 3 - Post for @lenonmc21

Question 1 - Define in your own words what is a "Trend" and trend lines and what is their role in charts?

What is a Trend?

In the cryptocurrency space, trend and trend lines are two of the popular terms that is mostly used by technical analysts. A trend is basically the direction a cryptocurrency market is moving in a period of time. The trend in the market indicates the direction that the price of any cryptocurrency in the market is moving. In the crypto space, there are 3 types of trends namely; uptrend, downtrend and sideways trend.

Uptrend

Uptrend is basically a trend in the cryptocurrency market where the overall direction is moving upwards or price of any cryptocurrency is moving in an upward direction, creating successive higher-highs and higher-lows.

Downtrend

Downtrend is basically a trend in the cryptocurrency market where the overall direction is moving downwards or price of any cryptocurrency is moving in a downward direction, creating successive lower-highs and lower-lows.

What is Trend Lines?

Trend line is basically a very common tool used in technical analysis that is drawn on a cryptocurrency price chart, clearly showing the direction the market is moving or the trend in the market. Trend lines are recognizable lines that is drawn on a chart, connecting a series of price points in a cryptocurrency price chart that shows the price movement and direction of the market. Trend lines indicates if the market is in an uptrend or a downtrend as it is a line that connects the higher-lows in an uptrend direction and lower-highs in a downtrend direction.

BNB/USDT Chart

ETH/USDT Chart

What is their role in charts?

The main role of a trend line in a chart is to help identify or determine the direction the market is moving. Simply put, a trend line helps to identify the trend in the market. Depending on the slope direction of the trend line, it can help identify whether the market is moving in an uptrend or a downtrend. If the trend line connects two or more higher-lows, it can indicate that the market is moving in an uptrend direction. If the trend line connects two or more lower-highs, it can indicate that the market is moving in a downtrend direction.

Also, the role of a trend line in a chart is to help traders determine when to enter or exit a trade. Simply put, a trend line on a chart can help determine when to buy or sell a cryptocurrency based on the slope direction of the trend line.

Question 2 - Explain how to draw an uptrend line and a downtrend line

Uptrend line

Like an uptrend which is basically a trend in the cryptocurrency market where the overall direction is moving in an upward direction, creating successive higher-highs and higher-lows. An uptrend line is basically a line that indicates if the market is in an uptrend by connecting two or more higher-lows in an upward slope direction.

To draw an uptrend line, we need to make use of any cryptocurrency price chart. A great charting tool for drawing trend lines is tradingview, but it can be drawn on any price chart as far as there are recognizable patterns. To draw an uptrend trend line, locate 2 or more patterns with visible and successive higher-highs and higher-lows points, and connect the line across all the recognizable higher-low points.

Downtrend line

Like a downtrend which is basically a trend in the cryptocurrency market where the overall direction is moving in a downward direction, and creating successive lower-highs and lower-lows. A downtrend line is basically a line that indicates if the market is in a downtrend by connecting two or more lower-highs in a downward slope direction.

To draw a downtrend line, locate 2 or more patterns with visible and successive lower-highs and lower-lows points, and connect the line across all the recognizable lower-high points.

Question 3 - Define in your own words what "Supports and Resistances are and how we can identify both zones

In the world of technical analysis and cryptocurrency trading, support and resistance are two very common tools and strategy when it comes to technical analysis.

Support

Support in a cryptocurrency price chart is basically the level when the price of a cryptocurrency pauses while on a downward movement and reverses in an upward direction. Simply put, in a downward movement, a support level is the floor to which the price of a cryptocurrency falls to before bouncing back up and reversing in an upwards direction. For instance, from the screenshot below, we can see the support level of BNB is at $308. The price of BNB hit the support at $308 before bouncing off and reversing upwards.

BNB/USDT Chart

Resistance

Resistance in a cryptocurrency price chart is basically the level when the price of a cryptocurrency pauses while on an upward movement and reverses into a downward direction. Simply put, in an upward movement, a resistance level is the roof or ceiling in which the price of a cryptocurrency hits to before bouncing back down and reversing in a downward direction. For instance, from the screenshot below, we can see the resistance level of ETH is at around $2910. The price of ETH hit the resistance at around $2910 before bouncing back down and reversing downwards.

ETH/USDT Chart

Question 4 - Explain in your own words at least 2 simple chart patterns

When it comes to cryptocurrency trading, chart patterns are a key elements of technical analysis and can help indicate the direction the market will go, and also help traders determine when to buy and sell any cryptocurrency based on the pattern on the price chart. Chart patterns are formed based on the market psychology of the buyers and sellers in the market. This patterns help traders predict the direction of the market. There are number of different chart patterns that are popular and used by many traders during technical analysis. The two common chart patterns are; Ascending Triangle and Rising Wedge.

Ascending Triangle

The Ascending Triangle pattern on a price chart is basically formed during an uptrend movement and it helps indicate that the uptrend is continuing. The ascending triangle shows up as a triangle that is right-angled, with the top horizontal line of resistance and the bottom slope of higher lows. The ascending triangle is simply formed where the support line and the resistance line meet. This type of chart pattern is a great indication that the market is continuing in the uptrend direction.

BNB?USDT Chart

Rising Wedge

The wedge is basically a reversal chart pattern. The Rising Wedge pattern on a price chart is basically formed by two converging trend lines when the cryptocurrency market prices have been increasing for a period of time. A rising wedge can be formed in either an uptrend or a downtrend. A rising wedge in uptrend indicates that the market is reversing to the downtrend. A rising wedge in downtrend indicates that the market is reversing to the uptrend.

Conclusion

When it comes to trading any cryptocurrency asset, technical analysis is very important. Trend and trend lines are very popular when it comes to technical analysis and can help a trader make better trading decisions. A trend is basically the direction a cryptocurrency market is moving in a period of time. The trend in the market indicates the direction that the price of any cryptocurrency in the market is moving. A Trend lines on the other hand, are recognizable lines that is drawn on a chart, connecting a series of price points in a cryptocurrency price chart that shows the price movement and direction of the market. Also, chart patterns are a key elements of technical analysis and can help indicate the direction the market will go, and also help traders determine when to buy and sell any cryptocurrency based on the pattern on the price chart.

@lenonmc21