Steemit Crypto Academy | Assignment By @stream4u on Technical Indicator: Pivot Points.

Question 1

In order to make profit and minimize loss in the cryptocurrency world, it is neccessary to understand the market, a crypto trader was understand where the market is heading to, is it falling or rising ?. To understand the market direction, the trader need some tools which are indicators, indicators are very important to understand the market direction and one of this indicators is known as Pivot point.

Pivot points Is a technical analysis indicator that is used to identify the market direction over a different timeframe.

It is used to determine market course by calculating the high, low and closing price of the previous session. If the market in the next session trades above the pivot point this means the market is bullish and if it trades below the pivot point, the market is bearish. Pivot point is majorly used by traders to know the entry and exit point of a crypto market.

Question 2

pivot points are calculated based on the high, low, and close prices of the previous trading, for example for daily pivot points are calculated using the high,low and close prices of the previous day while monthly is calculated using the high,low and close prices of the previous month.

There are seven levels of the pivot points and they are:

1. Pivot point (PP) – PP is the most important pivot level as it is uses in calculation of other levels, it is the center and basic pivot point on the chart.

2. Resistance 1 (R1) – R1 is the first pivot level above the basic pivot point.

3. Resistance 2 (R2) – R2 is above R1 and is the second pivot level above the basic pivot point.

4. Resistance 3 (R3) – R3 is above R2 and second above R1. It is the third pivot level above the basic pivot point.

5. Support 1 (S1) – S1 is first pivot level below PP

6. Support 2 (S2) – S2 is the first below S1 pivot level and as second below the basic pivot point.

7. Support 3 (S3) – S3 is the last pivot level and it below the PP, S1, S2.

On your chart, you can change this pivot levels to different color so you can easily identify them.

Question 3

It is very easy to calculate the pivot levels, there are special calculators that are programmed to calculate them but if you wish to know how to calculate it yourself, here is the formula.

1. Pivot Point (PP) : To calculate pp, you add daily high plus daily low plus close price and them divide by 3. (high + low + close) ÷ 3.

2. Resistance 1 (R1) : To calculate R1, multiply pivot point by two then minus your answer from daily low. (PP ×2 ) - daily low.

3. Resistance 2 (R2) : To calculate R2, minus daily high from low then add pivot point. Pp + (high - low).

4. Support 1 (S1) : To calculate S1, you first multiply pivot point by 2 then minus it from daily high. (Pp × 2) - high.

5. Support 2 (S2) : To calculate S2, subtract daily high from low then subtract your answer from pivot point. Pp- (high- low).

Question 4

Most trading platform have a built in pivot points indicator. Let's Yahoo finance to apply pivots point on our chart.

You search for yahoo finance chart and click on crypto of your choice, I picked eth-usd and the image below will display

You click on the icon labelled indicators, this will allow you have access to the different cryptocurrency indicators on the network. After clicking on indicators, search from the list of available indicator for pivot points.

After clicking on pivot point, the image below will show up then you can configure your pivot levels for easy identification

My pp is black and we can see the colors of the r 1-3 and s 1-3. The part where where there is type is where you can type of pivot point, there is only two types of pivot point on Yahoo finance which is fibonacci and standard.

After configuring the colors and type to your choice, you click on save and the pivot point of today's trade will be automatically calculated.

Question 5

Pivot points is used majorly to know the market trend so as to know when to enter or exit the
market. It provides the support and resistant features thereby assisting traders in making
decisions. Let's do analyse a chart so we can know how pivot points work.

The image above is for eth -usd and base on the chart and this the the 1 hour time fr as me, we can see the image illustrate that the candles were on the pivot points at the begin of the hour and then it continues the bullish trend and passed R1 but later it fell below R1 and rises again to it but later the fall begins to set in. Base on the chart we can see that eth-usd is bullish within the 1hr time frame and a trader can do exit to take profit or do short trade but to be on the safer side, it is neccessary to put a stop loss at S1.

Lets take Another example,

The chart above is for btc-usd and the time frame is a for a day. base on this chart, we can see the market is bearish as the price was falling continously until it reached S1 and it bounced back to pivot point and went higher a bit, after few hours, the price kept on falling again it fell to S1 back and the fall continues to S2 and currently nearing S3. For a trader who is trading for a short time, it is the best time to exist the market to reduce lose but for traders who are long trading, it Is best to put a stop loss at S3 to minimize loss and also new traders can pick this period as their entry period into the market.

Question 6

The image above is for btc - usd and the time frame used is 1hr while the chart covers 5days of the market trend.

We can clearly see that the market was above the pivot point and towards R1 at the beginning of the chart but it was not able to break out the R1 so it bounced back to the pivot level, long term traders would still continue trading but short term will exist market when at R1 but when the price to s1 and nearing S2, traders will buy now as it is cheaper and when almost at s2 which is may 28, the trend became bullish again and price continue increasing until 29 that it became bearish again. Currently the market is bullish.

Question 7

Mistakes most traders make when using pivot point are :

1. Most traders put their stop loss at exactly support level maybe s1, s2 or s3, the stop loss should be placed slightly below the support level.

2. Most traders are poor with risk management, their excess greed for profits makes them incur more loss, when the trend is at resistance level, they always continues trading or holding with the hope that the trend will continue and sometimes the trend falls, instead of exiting when the trend is nearing PP they won't thereby incurring more loss.

3. Some traders only look at the short time frame to analyse the pivot point like daily trend only and rarely look at the weekly or monthly trend. This affects them when making decision.

Question 8

The advantages of PP are :

1. It Is very good for short time trading, pivot point is one of the best indicator for short trade like daily trading, traders can easily study the trend of the past day using the minutes time frame so they can make quick decisions.

2. The pivot point is also one of the most accurate indicator and reliable indicator as it takes in account the overall trend of market.

3. It is very easy to use Pivot point as most trading platform has a automatical calculator that shows the pivot levels in all chart.

Question 9

That is bitcoin to us dollars trade, currently the market is above the pivot point but it is slowly falling to the pivot point, base on this chart I can predict that the trend will rise before the end of the day and bitcoin is will rise between 36,200 to 36,700 before the close of today's market. So the bull trend will continue.

Question 10

The image above is ethereum chart and having analyse the directions of this chart and studying ethereum with other indicators. Ethreum is the largest altcoin base on market capitalization and with the rate at which bitcoin Is experiencing a bearish trend, Ethereum deman will increase more over the week.

The chart technical analysis of Ethereum clearly shows that the market is uptrend and the fall in price is only for now. By next week the low level is likely to be $2700 and the high level would be between $3000 to $3200.

Cc: @stream4u