Crypto Academy Season 3 Week 5 | Homework Post for Professor @imagen | Market Patterns and Blockchain Projects

It is a great day here. Good day to you all. This is my first week in intermediate class and I must confess that the lectures so far has been great. It's therefore my pleasure to submit this homework task to Professor@imagen. Professor dealt well with the topic "Market Patterns and Blockchain Projects", he taught it a very simple way which everyone can understand. That being said. At the end of the lecture, Prof asked four questions. The questions read:

1. Choose at least 1 of the following cryptocurrencies.
   Axie Infinity AXS
   Chilliz CHZ
   Cardano ADA
   VeChain VET
   Make an investment of $ 12 or more. Show screenshots of the process. Why did you choose this cryptocurrency? What is it Market Capitalization? What is it position in the cryptoasset rankings? What is the objective of the project behind this coin? Who founded this coin? Show the roadmap. What is the specific purpose of the cryptocurrency?
   You can make your investment in another cryptocurrency, but you have to answer the same questions. (Currencies that are not allowed: TRON, Steem, SBD, Bitcoin, Ethereum or any stablecoin)
2. Explain in your own words what the "Evening Star" pattern consists of. What is its hit rate?
3. Explain in your own words what the pattern "Abandoned Baby" consists of. What is the percentage correct?
4. Perform analysis for 3 and 7 recent calendar days for Bitcoin Do you identify any patterns? Show screenshots

So I am going to be taking these questions one after the other and answer them based on my understanding of the lecture.

QUESTION 1

Choose at least 1 of the following cryptocurrencies.
Axie Infinity AXS
Chilliz CHZ
Cardano ADA
VeChain VET

Make an investment of $ 12 or more. Show screenshots of the process. Why did you choose this cryptocurrency? What is it Market Capitalization? What is it position in the cryptoasset rankings? What is the objective of the project behind this coin? Who founded this coin? Show the roadmap. What is the specific purpose of the cryptocurrency?
You can make your investment in another cryptocurrency, but you have to answer the same questions. (Currencies that are not allowed: TRON, Steem, SBD, Bitcoin, Ethereum or any stablecoin)

For this question, I have considered making investment in Cardano (ADA). I will discuss the reason why I have chosen the coin later.

Making an Investment into a Cryptocurrency, Cardano (ADA)

Now, I'm going to use binance exchange platform to make this investment. I have binance App on my phone, and I navigated to where Apps are, clicked on binance App and it opened to home. My account is verified, and I can execute trade. I clicked on the "trade" in the home page. See the screenshot below

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Now after that, I searched for ADA. Because I have money on my USDT, I chose ADA/USDT pair. See the screenshot below

/_{Searching for ADA using Search Box}

I clicked on the ADA/USDT pair to buy ADA. Below screenshot shows the amount of USD I invested and the market price the asset is.

_{Purchase of ADA with USDT}

As it can be seen in the screenshot, I invested 13USD to ADA. I clicked on the market price because I want to buy ADA at the current market price. The current market price is 1.2715. So after filling all the details, I clicked on buy, and the order was executed. Then the order is filled. See the screenshot below.

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That is the Step by step process I have used on binance exchange platform to invest in ADA using my USDT.

Reason For Choosing Cardano (ADA)

Some of the reasons why I have chosen Cardano (ADA) and invested in it are:

• Firstly the reason I consider investing in Cardano is because it's listed on the exchange platform, binance that I'm using. If it's not listed, I would not have considered investing in it.

• The Growth of the coin. The coin, Cardano (ADA)is one of the fatest- growing cryptocurrencies and its growth is due to its blockchain improvement. Because of its peculiarities in its blockchain, many organizations and government use its blockchain. Also it is one of the coin which has be growing steadily over the years. This shows in its value. Infact, looking at the chart of the asset, the price has been in an uptrend.

• High Capitalization.Another reason why I chose Cardano is because of its capitalization. High capitalization will be of my great advantage if at all I want to exchange my cardano asset to fiat money.

Market Capitalization of Cardano (ADA)

For market capitalization of of Cardano ADA, I used coinmarketcap. You can visit the site, too. Click here to check.
Below is the screenshot of the home page of coinmarketcap.

_{Coinmarketcap Home page}

Now, because I'm interested in knowing the market capitalization of the coin Cardano ADA, I used search box available at the top of the page. I wrote 'Cardano', and in fact before I even finishing writing it, it brought the asset. See the screenshot below

_{Searching for Cardano Using Search Box}

I clicked on the Cardano to see the features I was looking for. Below is the screenshot showing the market cap. of Cardano (ADA)

_{Market Capitalization of Cardano ADA}

As it can be seen from the screenshot above, the market capitalization of Cardano is 40, 385, 012, 973
Now, that being said. Let's move on to see its ranking.

The Position of Cardano (ADA) in the Crypto Asset Ranking

Now, for the ranking of Cardano ADA, I used the same coinmarketcap. And on the same page where I found its Market Capitalization highlighted above, the ranking is there. Let's see the ranking of Cardano by coinmarketcap in the screenshot below.

_{Rank of Cardano ADA}

From the screenshot above, it can be seen that Cardano ADA is ranked 5th

The Objective of the the Project Behind this Coin, the Specific Purpose of the coin, the Founder the coin, and The Road Map

I'm going to start with the founder of the coin. The founder of Cardano ADA is Charles Hoskinson. This man is a co-founder of Etherum and he started developing cardano in 2015. He finally launched it in 2017.
The coin, cardano ADA is a cryptocurrency which is designed to be run on proof of stake ouroboros consensus mechanism.

Since the founders understand the shortcomings of Etherum blockchain, then he he was actually working to provide solutions to these shortcomings. Thus the objective behind the project is to design a decentralized blockchain that will solve the issue of sustainability that affects the older blockchains and for building and running smart contracts. This would enable people to develop smart contracts without having third party agreement.
Furthermore, to have a system in which different block chain can interact without any means of intermediary and to have a network that can handle mass transaction which can be as fast as possible

The specific purpose of the coin is to create a stable and secure cryptocurrency ecosystem.

Now, that being said. Let's see the the road map of the coin below.

_{Cardano Road Map}^{IMAGE SOURCE}

QUESTION 2

2. Explain in your own words what the "Evening Star" pattern consists of. What is its hit rate?

Evening star candlestick pattern is a type of candlestick pattern which traders look for on the chart. It is a bearish reversal pattern. This pattern is often forms at the resistance level or zone. The pattern consists of three candles. The first is the strong bullish candle, follow by a small candle (or indecision candle. Indecision in the sense that, there's no clear difference between the opening price and closing price of the candle. Buyers and sellers are dragging the price between themselves and therefore results in forming the candle called indecision candle) in the middle and then a bearish candle. Let's see he image of the evening star candlestick pattern below.

_{Evening Star Candlestick Pattern}^{IMAGE SOURCE}

The indecision candle that forms often signifies exhaustion. As there was a strong bullish candle before the indecision candle and at once, an indecision candle forms. This means, that the buyers are exhausted, and the sellers want to take hold of the market. It is pertinent to know that the bearish candle that forms after the indecision candle must engulf the indecision candle. If it doesn't engulf it, that means, it is not an evening star candlestick pattern. Then the when the bearish candle forms, it signifies that the sellers have really taken over. When this pattern forms at a key level or resistance zone, it usually drives price downward with a great momentum.
The screenshot below is an example of of an evening star candlestick pattern that formed on a BTCUSD, H4 chart.

_{Evening Star Candlestick Pattern on BTCUSD, H4 Chart}

As it can be seen, the pattern formed and the bullish trend turned to bearish trend. Evening star candlestick pattern is a very strong bearish reversal pattern, especially when forms on a resistance level.

The hit rate of this candlestick pattern is between 69% and 71%. Some traders even trade only this pattern because it easy to spot and because of it's hit rate.

QUESTION 3

3. Explain in your own words what the pattern "Abandoned Baby" consists of. What is the percentage correct?

Abandoned baby is a type of candlestick pattern that when form on either resistance or support level may change the direction of the price. It is a reversal pattern which traders look out for in order to position themselves for the next move. Basically there are two types of this pattern. Namely:

1. Bullish Abandoned Baby
2. Bearish Abandoned Baby
   I will discuss each of this pattern, what they consist of and the psychology behind their formation. Let's get into the first one.

Bullish Abandoned Baby

Bullish abandoned baby is a type of candlestick pattern which forms at a key support level or zone. The pattern is a bullish reversal pattern. Bullish abandoned pattern consists of three candles. They are:
• A Bearish candle
• A doji candle
• A Bullish candle

See the example of a bullish abandoned baby in image below

_{Bullish Abandoned Baby}^{IMAGE SOURCE}

The bearish candle, which is the first candle that consists of a bullish abandoned baby, must have a large body. It is usually shows a very great momentum in price and that signifies that the sellers are still in control of price. This candle forms in the direction of downtrend and must large enough which signifies high volume.

The next candle which is doji is formed after the the bearish candle. This candle must form in a way that there must be gap down. That is, there must be a space between the high of the bearish candle and the doji candle that forms. It is important to know that without this space, it's not consider as a bullish abandoned baby candlestick pattern. A Doji (sometimes it could be two doji canldes) that form is a sign of exhaustion. The strength or great momentum that the sellers come with has been greatly reduced. When this form, traders usually expect a bullish candle to form that will open above the doji candle. The doji is usually referred to as baby candle.

The last candle which is the bullish candle must also have a large body. The candle opens above the doji and a space or gap must be left in between the doji and the bullish candle in order for the pattern to be complete. The volume or momentum with which the buyers enter the market after a period of indecision that the doji candle created usually mean that the buyers are taking over the market and that the trend is about to be shifted to bullish trend. When this pattern is spotted after a long downtrend, and at a support zone, it usually reverse the price. the bullish and bearish candle are sometimes refer to as parent candle.

Bearish Abandoned Baby

Bearish abandoned baby candlestick pattern is a direct opposite of bullish abandoned baby. This pattern is also a reversal pattern, but in it's case, it is a bearish reversal pattern. Before the pattern is formed, price of an asset must have been in a very long uptrend. The pattern, bearish abandoned baby candlestick pattern, consists of three candles. These candles are:
• A bullish candle
• A doji candle (in the middle of bullish and bearish candle)
• A bearish candle

The screenshot below shows an example of a bearish abandoned baby

_{Bearish Abandoned Baby}
^{IMAGE SOURCE}

As it can be seen in the screenshot, the first candle that forms this pattern is a large bullish candle. This signifies that the buyers are still in the market controlling the price.

The next candle that forms is a doji candle. This candle is in form of plus sign and it sometimes signifies indecision between the buyers and sellers. Like a bullish abandoned baby candlestick pattern, there must be a space between the first bullish candle and the doji. The space is known as gap. In the formation of this pattern, this gap is very important because without it, it is not a bearish abandoned baby.

The next candle in the formation of this pattern is a bearish candle. This bearish candle must be large enough. This bearish candle forms after a period of indecision between the buyers and the sellers. It usually signifies that the sellers have gained momentum and that the trend is shifting from bull phase to bear phase.

The Percentage of Correct

The percentage of correct for this pattern is between 67% and 68%. However some traders believe it higher than that. And the reason for their argument is because, the pattern is very rare and if it's rare, then they believe it must be correct.

QUESTION 4

Perform analysis for 3 and 7 recent calendar days for Bitcoin Do you identify any patterns? Show screenshots

For this analysis, I have decided to use BTCUSD.

For 3 Recent Calendar Days

The three recent days from 27th to 29th, June 2021 . I identified some candlestick pattern. Listed below is the pattern I identified
• Bearish engulfing
• Bullish Pin bar
• Evening Star

The chart of BTCUSD on M30 timeframe shows these pattern. See the screenshot below

_{BTCUSD 3 Recent days Chart} ^{IMAGE SOURCE}

A bearish engulfing pattern is a type of candlestick pattern that forms at a resistance level. It consists of two candles. The first candle is a green or white candle depending on the color which trader set his chart, but the important factor is that, it must be a bullish candle. And the second candle is a bearish candle. This bearish candle must engulf the first candle in order for this pattern to be considered as a bearish engulfing candlestick pattern.

Bullish Pin bar pattern is formed when the sellers are exhausted and the buyers take hold of the market. It is just a candle. The candle has a long tail and small body. The closing price and the opening price are very close to each other, thus small body forms. This pattern is a reversal pattern especially when it's formed at a key support level.

Evening Star pattern has already been discussed in the previous question above.

For 7 Recent Calendar Days

For the 7 recent calendar days, I used the chart of BTCUSD. the chart was placed on H2 timeframe. The following candlestick patterns were identified.
✓ Bullish Pin Bar
✓ Bearish Pin Bar
✓ Morning Star
✓ Bearish Engulfing

Below is the screenshot showing these patterns on BTCUSD chart.

_{BTCUSD 7 Recent days Chart} ^{IMAGE SOURCE}

Bullish pin bar is a direct opposite of a bearish pin bar. The same psychology is behind it's formation, but in its case, the bears are exhausted after a very long bearish trend. The bullish candle forms at a key support level. The aggressive entering of buyers into the market drive the price upward to the extent that the closing of price and opening are very close to each other, leaving a very long tail or wick.

Also, among these patterns is morning star. Like evening Star discussed above, morning star is a bullish reversal pattern. It also comprises of three candles. The first candle is bearish candle which must have a large body. Its large body is a signal that the bears or sellers are still in control of price. The next candle that follows this candle is small candle. The candle even signifies indecision as the sellers can't drive the price downward and buyers can't drive the price upward. Then after a period of time, buyers step in with a very great momentum resulting in a large bullish candle to form. This candle is a third candle that forms in the process of morning star candlestick pattern.

CONCLUSION

Having gone through the lecture, and done an extensive research, I have been able to learn more about candlesticks pattern. I didn't only learn about them, but I have been able to also recognize these patterns on the chart.

Also, the first question which is on blockchain, I was able to make a trade on my binance account. The cryptocurrency, Cardano ADA I chose made me to research extensively and learn so many things not only about the coin but also about the older coins. Thank you professor @imagen for the great lecture. It added a whole lot to me.

CC : Professor @imagen
Written by @msquaretk