Steemit Crypto Academy Contest / S14W5 -Exploring STEEM/USDT Trading .

Hello friends, I believe you enjoy your Christmas celebration, and hoping to enjoy the new year also. I wish you more favor in life to enjoy with your family.

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Here, I welcome you to this post, in which I have discussed many things in the area of technical analysis, trading strategies, risk management, and so on.

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Technical analysis:
Using the MACD, how can you identify a buy or sell signal for the STEEM/USDT pair? And what do the upper band and lower band in the Bollinger Bands for the STEEM/USDT pair indicate?

Before we get fully to how we can use the MACD to identify the buy or sell signal for the STEEM/USDT pair, let's first look at what MACD means briefly.

_{screenshot from Tradingview app}

MACD stands for Moving Average Convergence-Divergence indicator. It is an indicator that has 2 lines which are the Signal and MACD line that you can use and generate a buy or sell signal for the STEEM/USDT pair or any other crypto pair. It also helps you to know if an asset is overbought or oversold. Now, let's take a look at how we can use MACD to identify a buy or sell signal for the STEEM/USDT pair.

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How to identify a buy or sell signal using MACD for the STEEM/USDT pair.

Looking at the chart, you can see the MACD line, the Signal line, and also a bar chart in the screenshot. Now, when you see that the MACD line has crossed above the signal line, you should place a buy sign. (When the MACD line crosses above the line it means a buy signal.

If the MACD crosses below the signal line, it is identified as a sell signal. In the chart of STEEM/USDT that is shared above you can see how the MACD line crosses above the line and also falls below the line as indicated in the screenshot image.

The 2 lines fluctuate around that of the zero line, which means when you see that the MACD or the signal line has crossed below the zero line a sell signal is identified, and a buy signal is identified when the lines cross above the signal line.

The upper band and lower band in the Bollinger Bands for the STEEM/USDT pair

_{screenshot from Tradingview app}

From the screenshot, you can see that the Bollinger bands have both upper, middle, and lower bands. The middle band stands for 20 period SMA which is surrounded by the upper Bollinger bands and the lower Bollinger bands.

Using the STEEM/USDT pair, at the time the price of Steem closed above the upper Bollinger band, the price became overbought which it then retreated slowly in price. At this point, smart traders begin selling their Steem, whereas some set a hedge against the potential place the price retreats from.

_{screenshot from Tradingview app}

On the other side, at the time the price of Steem dipped (fall) below the lower Bollinger band, the market became oversold which most traders saw as an opportunity to buy Steem back.

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Trading Strategies:
How can the combination of RSI and moving average help determine entry and exit points for STEEM/USDT? And how could a trader use the Stochastic Oscillator to confirm bullish or bearish trends in the STEEM/USDT pair?

The combination of RSI and moving average can help determine entry and exit points for the STEEM/USDT pair and also help provide traders with additional confirmation and increase trading signal.

As a trader when you combine both, you will gain more valuable insights on potential reversal points and trends. First, let's look at how we can use the indicator for the buy signal.

_{screenshot from Tradingview app}

For you to determine a buy signal, using RSI and moving average you will need to identify if the price of Steem/USDT is an Uptrend by observing higher highs, and higher lows in the chart of STEEM/USDT.

In this case, you will have to confirm if the RSI is above the level of 50, which is an indication that the market is bullish. After seeing this, look at the chart there is a strong crossover of the 20-day moving average. For a buy position, the cross should be above the 50-day moving average.

_{screenshot from Tradingview app}

For a sell signal using the combination of RSI and moving average, you will need to identify a downtrend by looking for lower highs and lower lows on the chart of STEEM/USDT. Confirm if the RSI is below below 50 level, which means a bearish trend.

Look on the chart for a bearish crossover of the moving average and once you see that there is a cross you can place a sell position since it is a sell signal.

Entry and Exit Points

_{screenshot from Tradingview app}

For an entry and exit point, you will need to consider adding additional information like support and resistance levels to make proper decisions.

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Using a Stochastic Oscillator to confirm bullish or bearish trends in the STEEM/USDT pair?

To confirm bullish or bearish trends in the STEEM/USDT pair using a Stochastic Oscillator, you will have to look out for a point that is above or below 20.

_{screenshot from Tradingview app}

To this, when you see that the Stochastic Oscillator is above 80 points it means is a confirmation of a strong bullish trend, but when you see that the Stochastic Oscillator is below 20 points it means it is a confirmation of a strong bearish trend.

_{screenshot from Tradingview app}

Now, in a situation where you see that the Stochastic Oscillator, is in the area of overbought or oversold, don't panic instead, just point an eye on the chart and follow the trend before making a move.

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Risk management:
How important is a stop-loss when trading STEEM/USDT, and how can it be set based on technical analysis? Why is it essential to diversify positions when trading the STEEM/USDT pair?

Stop-loss is very important when trading STEEM/USDT, as the stop is what helps traders and investors limit losses in the market when a position is open. The most important thing about stop-loss is I wouldn't be awake to monitor my trade since it is an automatic order that helps me close my position and prevents me from further losses.

_{screenshot from Tradingview app}

For example, I am trading on STEEM/USDT and I buy Steem at $0.25 I don't want to hold Steem if the price falls to below $0.23, and I want to sell it and close my position at the level $0.23 I have two ways to close my position.

It is either I monitor the price and close my position manually or I set the stop loss order so it can trigger automatically once the price of Steem hits $0.23. In setting my stop-loss using trading view click on the icon indicated below in the screenshot and create a sell order as shown in the screenshot.

_{screenshot from Tradingview app}

At this point, set your stop-loss order at the level you want it to execute.

It is important to diversify positions when trading STEEM/USDT pairs because you don't know if the price will fall or rise back. Like, for a trader with a double mind, you can set both stop-loss and take profit orders which put in both profit and loss. Setting take profit also, can help you achieve profit before the price of STEEM can hit your take profit before it retraces back to your stop-loss.

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Fundamental Analysis:

What fundamental factors should one consider before taking a long or short position in STEEM/USDT? and how can external events, such as announcements related to STEEM or stablecoins, influence the trading of the STEEM/USDT pair?

Before taking a long or short position in STEEM/USDT you will first decide between going short or going long. Taking this decision should be supported by how bullish or bearish you feel about the direction of Steem/USDT.

Now, if you feel bullish, and think the price of STEEM/USDT will keep rising, you should take a long position which is the same thing as buying to sell it higher than what you buy if you want to trade on the spot.

If you feel bearish about the price of Steem/USDT that the price of Steem will fall further, you can go for the short position which is sell. If your decision is accurate, you will make profits because the market moves in your favor, but if your decision whether long or short is wrong, then you will be at a loss and the only thing that would limit your losses is the stop-loss you have set.

Extend events, such as announcements related to STEEM stablecoins influence the trading of the STEEM/USDT pair, based on how positive or negative the announcement is. If the announcement is a positive announcement that is in favor of the market, the price of Steem will rise and all those who enter long (buy) will make huge profits.

If the announcement is a negative announcement, which isn't in favor of the Steem/USDT pair, the price of STEEM will fall and all those that enter short (sell) will make huge profits. All this can happen as a result of government rules, and so on.

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Leading Indicators:
Apart from commonly used indicators, what other leading indicator could be useful to analyze the behavior of the STEEM/USDT pair? and how can trading volume be interpreted to predict future movements of STEEM/USDT?

_{screenshot from Tradingview app}

Williams %R is a leading indicator that could be useful to analyze the behavior of the Steem/USDT pair.. it is an indicator that is similar to that of a Stochastic Oscillator the only difference is that Williams indicator works on a negative scale which is ranges between zero (0) and hundred (100) and make uses of -20 and -80 as the level of overbought and oversold.

_{screenshot from Tradingview app}

On the chart of STEEM/USDT, when you see that the green line is below - 80 it means the price of Steem is likely to rise, but when you see that the red line is above -20, it means the price of Steem is likely to fall.

Trading volume can be used to predict the future movement of STEEM/USDT as it can help traders gauge the strength of price movements of STEEM, assess liquidity, and measure and interpret the market sentiment of Steem/USDT.

_{screenshot from Tradingview app}

In all and all a higher volume means there is an increased activity of buyers or sellers in the market which if it's green candles that are higher, it means buyers are more than sellers in the market.

In a nutshell, volume is represented by bars at the bottom of a trading window, just as it is shown in the chart of the STEEM/USDT pair above.

Each of the candlesticks represents the activities of the market and if Steem, closes above the opening price of its candle, the volume bar, and the candle will become green which is an indication that buyers are interested in holding Steem.

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Conclusion

This is a very interesting engagement Challenge that has made me learn more things as the questions seem to be more technical than others. I am happy that I have done my best, in passing useful information concerning the contest tips which I will also like my friends; @patjewell, @ruthjoe, and @dave-hanny to also take part.