I'mToBasic EMA Strategy + Trend Line Break - Crypto Academy/ S4W6 - Homework Post for @lenonmc21 by @goodspeed22 16/10/2021

Hello friends, good evening. Below is my entry for this week's task on the above-mentioned title.

Theory

Question 1: Define and Explain in detail in your own words, what is the EMA Strategy + Breakout of the Trend line?

EMA pictures or envisages the normal price of an economic instrument/asset over a particular period of time. As a technical indicator, EMA depiction of a merely graphic moving average that appears in the form of a line and as the name indicates , equate a particular quantity of data, according to the period of time that the data is to be procured.

In fact, an Exponential Moving Average (EMA) concentrates more on current data that are breaking out or coming out while the price is moving, thus causing the reactions to the movements initiated by the price to be very effective, thereby minimizing wrong signals that may show up in the course of using this technical indicator.

As a form technical indicator that has been in use for a long time, EMA is a very efficient indicator used by many traders in different markets.

At this point, the strategy of EMA is useful in detecting the prevailing or overriding market trend. It can equally give the level of assistance to implement a trade. Hence, the strategy is a general strategy that can be applied in any given time period, like 100-period or less time, so that a trader will determine the exact market trend and make a good investment decision.

Question 2: Explain in detail the role of the 100-period EMA in the EMA + Trendline Breakout Strategy?

The function of the 100-period EMA is very significant, because it helps us out into good use this EMA Strategy. This long period will sis us also in critically examining the path that price of an asset is taking at a particular time of our choice. As our primary goal is to ascertain popular or prevailing direction of price at the present time (real time), from this we will find out whether the direction is going higher high or high low, that upward movement (bullish) or it is making a downward movement (bearish).

Within this period also (100-oeriod), we will be able to know or see when false signals occured and if it is the right time to make an entry or exit the market. This time period is very vital as it assist us analyze carefully general market price, thus, a trader or an investor can arrive at a good investment decision.

Question 3: Explain in detail the role of the "Trend Line" in the EMA + Breakout Strategy Trendline Breakout?

First and foremost, trend Line is the horizontal lines that slopes goes either upward or downward, sketched above , that is at the point where the price of an asset takes the highest position or under, where it takes the lowest position.

It is very important as it shows positions or a point where there is that pressure to make a purchase decision or to sell the asset. So it allows the trader to know when the market situations has taken a turn around, signifying a change in price. Also the participants can quickly act and adjust their methods trade in order to take good investment decision.

They can as well know when and where to place their stop loss and take profit, so as to maximize profit. Furthermore, the trend line will help us especially when it is correctly drawn with the 100-period EMA, we can clearly recognise the meeting point, or where it cut across the candle indicator and wait for the expected change in price.

Question 4: Explain the step by step of what needs to be taken into account to execute the EMA + Trendline Breakout strategy correctly?

In order to successfully implement the EMA + trend line breakout mechanism, the following processes need to be followed:

Step 1: EMA 100 Period
To begin with in our chart, we need to add the 100-period ENA because it will assist us to determine our course of action. From this period, if the price is on top of the 100-period EMA, the only decision is to buy the asset but when our trend line is underneat the 100-period EMA, it means there is much pressure on the selling point, then we sell.

Step 2: Market Structure and cycles
The way the market is, that is, if we are in the period of buy or sale, depending on the price movement, need to be carefully observed so that we can successfully apply this strategy.

Hence, when we see the bullish structure from the market, assuming the price is on top of the 100 EMA, we will Wu kly expect the highs and lows (upward movement) and given the correct interpretation, so as to take the necessary decision.

Also worthy of nite is that, there is definitely going to be a price reversal or change. When the market take this shape, we ought to wait for it to tske this change actually, so that we take action towards this new condition, which is bearish.

Step 3: Trend Line Traces
As we have clearly recognise our market structures, the next action is to draw our trend lines to I dicate the prevailing price movement. Like, when the trend is in upward position, then the lines will be drawn to the downward position, linking the highest points of the price. This in turn, results in lower highs and when this happens, it will assist us to clearly see and identify the upward break in order to take maximum trading activities.

We can take the opposite process I looking for our selling decision. If the trend is taking downward movement.

Question 5: What are the trade entry and exit criteria for the EMA + Trend Line Break strategy?
The factors that determined the entry and exit strategy of EMA + Trend Line Break are:

• We need to carefully observe when the price is in on top or u der the 100-period EMA and also if the price harmony is in line or blended well . After this, we sketch our trend lines, whether it going up (bullish) or going down (bearish) and then wait for any indicator (candle) that will cut across this line or the one that will close up on top of it, or under it. If we do this, it will present to us the sign to ENTER the trade.

But when there is no perfect blend of price trend, then we need to exercise patience and wait for another formation to take place so as to enter the market.

As the structure we are working with bke def well with the cycles and the meeting or linking point in the trend line is
confirmed truely, there is no other decision than to enter market.

Based on the trend, our "Stop loss" should be either on top or u der the highest or lowest price point, thus we can put it place our "Take Profit " at the same position with our "Stop Loss" in order to arrive at the exact profit ratio 1:1 and the real structure or formation.

Conclusion
From the lecture, I have learned some strategies that help me to trade on digital asset with the aid of this technical indicator - EMA.

Practice (Only Use your own images)
Make 2 entries (One Bullish and one Bearish) in any pair of "Cryptocurrencies" using the "EMA Strategy + Trend Line Break" (Use a Demo account, to be able to make your entry in real time at any timeframe of your choice, preferably low temporalities)

cc: @lenonmc21

Reference