Crypto Academy Season 4 | Intermediate course by @allbert –week 1: Trading with Strong, Weak and Gap Levels.

Hello, fellow steemians this is my assignment task for professor @allbert

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Graphically, explain the difference between Weak and Strong Levels. (Screenshots required) Explain what happens in the market for these differences to occur….

STRONG LEVELS

A support is the tendency of a market to bounce back up from previous lows in the market while resistance is the tendency of a market to pull back from previous market highs.
The support and resistance level serves as range which market prices are expected to stay within be it in an uptrend or downtrend within a period of time, in the case of strong support and resistance level we are referring to a scenario where the market price interacts repeatedly with the upper band known as resistance and the lower band referred to as support . Strong support and resistance level is mostly seen when price of an asset or a security moves bullish and bearish within a specific price range under a certain time frame which occasionally comes to an end with an abrupt break out to either continue in its previous trend or move in the direction of a new trend.

WEAK LEVELS

A support is the tendency of a market to bounce back up from previous lows in the market while resistance is the tendency of a market to pull back from previous market highs.
Weak support and resistance levels to some extent can be seen as the direct opposite in contrast to the strong levels. The weak support and resistance level are often seen when the price of asset or security interact for a brief period with the horizontal line of support and resistance, the weak levels differs significantly with the strong levels with the number of times it interacts with the support and resistance level which is often seen to be ussually just once or twice

CAUSES OF STRONG AND WEAK LEVELS

TRADERS

Traders play a crucial role in terms of determining strong or weak support and resistance level in the sense that they use the support and weak resistance level to determine entry and exit points for instance when a price hits a support level most traders often get signals or perceive that the market will pull back to previous highs or resistance level so the often tend to enter a buy signal until eventually a market bounce back to previous highs and vice versa happens when the market hits the resistance level when this circle occurs repeatedly STRONG LEVEL of resistance and support is seen but when this happens only once or twice a WEAK LEVEL of support and resistance is seen

BUYERS AND SELLERS

In some cases a STRONG or WEAK support and resistance level is determined by how buyers and sellers purchase asset or security. Assume the scenario where a buyer targets to buy an asset when it falls to 10$ and only sell at 15$, now let’s assume this psychology is not just the traders psychology it’s the entire market’s…This offset will cause a strong or weak support and resistance level depending on how frequent it occurred before a breakout occurs

2-Explain what a Gap is. (Required Screenshots) What happens in the market to cause It.

GAP

A Gap in this context is somewhat similar to what its literal meaning means. In a layman’s term, It’s a space that is seen often in a candlestick chart or Bar chart that occurs between the closing of a candlestick and the opening of another candlestick. In a more technical term, we could explain a Gap to be an area where there is rapid movement in the price of an asset or security with almost no trading activity occurring hence leads to a space chart

CAUSES
A Gap is mostly instigated by a little amount of trading activity or no trading activity occurring during the course of an active period of trading or rapid movement in such a way that the closing candle stick does not correspond with the next opening candle stick these two are the major factors behind gaps in charts

3- Explain the types of Gap (Screenshots required, it is not allowed to use the same images of the class).

From the course of our lecture Professor @allbert made us understand that they are 3 types of Gaps

• BRAKE-AWAY GAP
• RUN-AWAY GAP
• EXHAUSTION GAP

BREAK-AWAY GAP

As the name implies this type of gap in forms of breakouts. Breakouts is a type of price movement that goes above or below a support and resistance level only in the case the break-out happens in form of a gap rather than a proper movement out of support and resistance level. Its often used to indicate new trends either in a new direction or continuous

RUN-AWAY GAP

Runaway gaps is otherwise known as continuation gaps which implies that these gaps are often seen to continue in the direction of the previous trend, it is often known to be instigated by a spontaneous increase in buying or selling rate depending on the trend it previously was or caused by some relevant news in the market which can lead to panic or excitement in market psychology and this types of gaps are often seen while trades are still active or just beginning

EXHAUSTION GAP

The exhaustion gap as the name implies is most often seen towards the end of a trade and this type of gap initially looks like a runaway gap but a candle after the gap is seen there is immediate rejection in price level and the direction of trend is in most cases often seen to change.

4- Through a Demo account, perform the (buy/sell) through Strong Supports and resistances. Explain the procedure (Required Screenshots).

With the help of my half trend and EMA i was able to map out the direction of the trend and designed a good support and resistance level where I took my sell entry upon support and buy entry at resistance with a take profit and stop loss ratio of 1:3

5- Through a Demo account, perform the (buy/sell) through Gaps levels. Explain the procedure (Required Screenshots).

Using the Half trend and EMA with an amplitude length of 55 strategy and with the help of the imaginary indicated support and resistance line drawn i was able to anticipate that the gap forming in the trend was going to be within the range if support and resistance in that it is a strong zone I set my Take profit and loss ratio to 3:1 respectively

CONCLUSION

As a trader weather beginner or professional we all know that the ability to utilize information and knowledge in trading world is equivalent to significant profit, the more knowledge we have about an asset or security the more likely we are to act in the most profitable direction. Learning the strong and weak resistance level and how gaps are observed and building a strategy around this sort of information will often help traders to minimize loss and maximize profit intake. Thanks for the lecture professor @allbert I hope I answered most of my questions to your satisfaction and good day to you all