Crypto Academy Week 15 - Homework Post for @yohan2on
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Hello everyone at Steemit cryptocurrency academy, it is a pleasure to be here, acquiring all the knowledge possible, by the teachers who perform an arduous task in bringing us an incredible education, so that we, the students, can adapt to new ways of making money in this new market that are the cryptocurrencies, which are growing more and more as time goes by, therefore, it is necessary that we learn and adapt to the new ways of making money in this new boom that are the cryptocurrencies, can adapt to the new ways of making money in this new boom that are cryptocurrencies, which are growing more and more as time goes by, therefore, it is necessary that we learn and adapt to the ecosystem and what better way than in "SteemitCryptoAcademy" for that purpose. This time I want to perform the task of the teacher @yohan2on, in order to increase the knowledge I have been acquiring in trading and thus to practice and fully establish my own crypto strategy, under the trading style called "Swing".
Without further reference, I will get ready to answer the professor's assignment and I hope to do my best, so follow me in this assignment.
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This term is specifically linked to analyze high time frames, in order to identify the strength and / or direction of a trend, to have a greater chance of success by making an investment in a particular financial asset. Generally, operating under this method of trading implies that we have a greater serenity and focus when analyzing, so the trader who uses it, will not be concerned about price fluctuations in lower time frames, thus, its main focus is to identify strong movements in the price, either upward or downward, to join the prevailing trend and thus obtain the greatest possible reward.
The best of all is that the "Swing Trader" does not have to be glued to the computer all day, watching the movements made by the asset where he invested, a unique feature of trade, used by those who do "Scalping", since the movements that commonly seek these, are very fast, which implies a constant monitoring of the asset and a great consumption of physical and mental energy that ends up weakening the investor. So, under this premise, I will use the various tools of technical analysis, in order to build a solid strategy that can bring me the highest possible profits in the medium and long term.
To show my trading strategy, I will analyze the asset "BNB-USDT", which I have been following for a while and I really like the project. Starting, I will use indicators and tools that I understand perfectly, based on these, I will explain my trading plan with which I am practicing and intend to invest soon, since I have been educating myself a lot on the subject of trading, because I want to devote myself to this work full time.
My trading strategy is composed of the various elements that I will describe shortly, I will also explain what is their function on the charts, highlighting how I use them and why, this will help you understand how I look for an entry and / or exit in the market and how I limit my losses protecting my operations.
- Timeframes (1S and 1D and 4H) and Supports and Resistances
- MACD Indicator (Default Settings)
- Trend Lines
- 200 Period EMA
- Candlestick Patterns
- Stop Loss
Now that I have named the tools I will use, I will explain how I use each of them on the charts:
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Timeframes: For my strategy I will use 3 timeframes, in that sense, the function of each one of them or what I am looking for, is to mark the most relevant zones of "Supports and/or Resistances", this is to know in which zone of the chart is more likely that the price will turn, looking for entries only in favor of the trend. In 1H temporality, I will mark these zones, later in 1D I will do the same, in addition to be able to see a possible entry to the market; and in 4H, I will observe the reaction that the price has with them, to look for a confirmation in conjunction with the MACD and a candlestick pattern that shows me the trigger of entry to the market, either up or down.
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MACD Indicator: It is the main pillar of my strategy, since it will give me the signal when a trend is about to start and what is my possible entry point. For this I use it in 2 main ways, in this sense, the first thing I look at is the "Histogram", this allows me to identify prematurely, the weakness of an ongoing trend and a possible reversal, this is very useful to know what exactly to expect. The second thing I use from this fabulous indicator is the MACD line and the SIGNAL line, looking for a crossing of these in favor of the general trend, combining this crossing, with the change of forces that my histogram shows and also a possible interaction with a relevant zone of (Support and/or Resistance), for further confirmation, finally, the trigger of my entry will be a candlestick pattern or a very clear sign of decision by the price to follow the course that I have predicted thanks to my indicators.
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Trend Lines: I use them a lot to know where I am on the chart, to be able to take advantage of a MACD crossover or a change of direction of the histogram in favor of the trend. If for example the price is making higher and higher lows and highs, it means that we are in an uptrend, so, in the next retracement of the price, I will be very careful that it does not break the last maximum formed by the price, because this would indicate weakness in the uptrend and, therefore, if my MACD shows me a crossover, this may be false and I do not operate it.
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200 Period EMA: This is a tool that helps me to filter the current market trend, generally, I add it to the chart, in order to help me not to make a mistake in the direction of my investment and I can enter the asset with the highest probabilities in my favor following the trend.
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Candlestick Patterns: These patterns are an essential part of my trading, since they indicate the exact moment when I am going to invest in an asset. Based on this, what I look for, are candles of the type: Envelopes, hammers, shooting stars, morning star and / or evening star. In this way I can ensure with a greater probability my entry into the market, of course, I also observe the size and possible strength of the impost, in order to have the best chance in my investment.
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Stop Loss: Finally, one of the most important points is my Stop Loss, so its configuration will be as follows:
This will be located in each operation that I make above the last bullish peak, in case my entry is bearish and below the last bearish low that the price has made, in case my entry is bullish.
I take into account the most relevant zones, in a few words, "Supports and/or Resistances" that I have previously marked on the chart. These points are where I will commonly take my trades and market entry.
My risk management will be focused on not risking more than I should of my total capital and in addition, try to make my money profitable in search of obtaining an effectiveness above 60%, which would ensure me to have a positive month of operations, which is what I mainly look for. Based on this, my risk will be controlled as follows:
- Maximum Loss per trade: 3%.
- Expected Profit per trade: 9%.
- Percentage of my capital to be invested per trade: 5%.
- Risk/Reward: 1-3.
- BNB 1S Chart Analysis
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In the BNB 1S charts, I have marked the most relevant support and resistance that the price has right now, which is forming a range, where the price has touched this support zone and has rejected it forming a new bullish candle that fails to wrap the previous one. On the other hand, the MACD shows me a bearish crossover of the MACD line with the signal line, combined with a change of direction in the MACD histogram from positive to negative. For me, this may be a false signal that, although it can move the price a little down, these are above the MACD ZERO line, indicating that the uptrend is still in force, so, at this point and chart, we must continue to observe the situation.
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Again in the 1S chart, drawing a trend line, we can see how the price is supporting in this part to possibly retake its upward course, this indicates that probably that MACD crossing is false, and only seeks to make a new setback, in order to seek further momentum and we see the price near the $700 again.
- BNB 1D Chart Analysis
On 1D charts, there is a clear reversal opportunity. The price as we saw earlier was supported by the trend line, however, the price has formed a secondary support and resistance, which is exactly where the price is swinging at the moment, now, the price is very close to the support, the MACD shows an imminent bullish crossover of the MACD and SIGNAL line, plus the weakness of the bearish movement reflected in the "Histogram" that will most likely change to positive, we also have the 200-day EMA reflecting the current uptrend placing it below the price, based on all this, we just have to see what is the next candlestick formation or how the one currently formed in the 1D chart ends, to enter the market. If the crossover, the candlestick pattern, the break of the secondary resistance and the change of polarity of the histogram, the entry would be approximately at $402.27, with a stop loss below the secondary support at $302.07 and a profit taking at the upper resistance at $690.
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- BNB 4H Chart Analysis
In this 4H chart, we can observe a very similar context to the 1D chart, but in a more detailed way, if we observe well, in this one also the same entry is given as in the previous one. The difference is that it traces a new trend line, where the price is currently using it as dynamic support. We can also see that in the MACD Histogram, the bearish movement is not so strong and it is possible that soon there will be a bullish crossover, combined with a candlestick pattern and the change of polarity of the "Histogram", so my entry targets in 4H would be exactly the same as in 1D. I should note that although the 200 EMA is above the price, reflecting a downtrend, it is flattening out, which can be interpreted as the price wants to resume its uptrend.
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To culminate, I have been delighted to participate in this task and I chose this strategy, since, for months I have been testing the MACD in detail to take trades in the markets, combining its elements with all the tools I described in this publication, to seek an effectiveness above 60% in my investments. I am a Swing trader, this is due to the fact that, I don't like trades in lower time frames, so for this reason I identified myself a lot with this assignment. Also thanks to the assignments I have done in the academy, they have helped me to understand the crypto market much more.
To all of you thank you very much for your attention.
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Illustrated graphics are great. You have a real talent for curriculum.
Hello @cieliss,
Thank you for participating in the 7th Week Crypto Course in its second season and for your efforts to complete the suggested tasks, you deserve a 10/10 rating, according to the following scale:
My review :
Excellent article in form and content. You dealt with the topic in all its aspects in a wonderful way, following a clear methodology. Your analysis is deep due to your use of several technical analysis indicators, which enabled you to get several signals.
Thanks again for your effort, and we look forward to reading your next work.
Sincerely,@kouba01