Starting Crypto Trading - Crypto Academy / S6W1 - Homework post for @pelon53
1.- In your own words, what is fundamental analysis? Do you think it is important for a trader? Justify the answer.
The cryptocurrency market is a highly volatile market where the value of the asset fluctuates a lot. The popularity of the currency has spread worldwide day by day and many new traders are being added here. I think the reason behind this popularity is the mechanism of Cryptocurrencies. It's not too long ago that Cryptocurrency came to where it became popular today by Bitcoin. Bitcoin's popularity has spread across the country through various media such as newspapers, websites, TV channels, Twitter, Instagram, YouTube, Facebook, etc. We can call the financial news that is published through this fundamental news and the analysis that is done from its fundamental news which is fundamental analysis.
Investors have started investing more and more and the demand for cryptocurrency has increased as more and more people have come to know about it. The value of cryptocurrency was not so high in the beginning, but when demand increased, so prices increased also. The process is continuously going on.
Fundamental analysis is a popular analysis in the crypto world.
Simple we can say that fundamental analysis is one kind of method of analysis that plays an important role to increase or decrease the demand for crypto assets. We all know that when the demand for any asset increase the price also increased as well. I think having an idea about fundamental analysis is a very common feature of an ideal trader because big fundamental news has a big impact on price in any cryptocurrency.
For example, when the news spread that Elon Musk would invest in DogeCoin, the value of this coin increased several times.
Do you think it's important for a trader
Undoubtedly I can say that fundamental analysis is an important analysis for traders. I gave an example earlier that when Elon Musk said he would invest in DogeCoin, its value multiplied very quickly and many people made huge profits from this fundamental news. Moreover, even after the news spread about Doge Coin, its price fluctuated a lot which is very important for a trader. Also when a new coin is added to a good exchange site, its price is in several times from which a trader can make a good profit.
I think it is important to do a fundamental analysis of what coins an investor will invest in. Fundamental analysis plays an important role in making a trading decision for a trader.
2.- Explain what you understand by technical analysis and show the differences with fundamental analysis.
Technical analysis is a very common analysis for a crypto trader. We use various tools like indicators to understand the movement of the crypto market. We also determine your support resistance through various tools. All this work is done to predict what the next behavior of the market will be. Such tools we use in various charts such as line chart candlestick pattern etc.
Considering the current state of the market, we use various tools to determine what its future movements might be. The method of determining the movement or behavior of the market using these various tools is called technical analysis. The analyses depend on various things such as volume, current price, high, low, etc. Generally, short-time traders give high priority to technical analysis.
Let's see the difference between Technical analysis and fundamental analysis.
There is a big difference between Technical Analysis and Fundamental Analysis. Firstly, fundamental analysis is one kind of financial event which impacts the increasing or decreasing price of an asset. On the other hand, technical analysis is not like that.
Secondly, Technical analysis depends on different tools such as charts, indicators, volume, etc. But Fundamental analysis does not depend on those tools.
Thirdly, the type of data used by fundamental analysis is the interest rate, GDP, employment rate, or different statistics. On the other hand, the technical analysis used all data from charts.
Fourthly, You need to be proficient in using the tools in the chart to perform technical analysis but the fundamental analysis is not usually required. The main goal of the two types of analysis is to predict the price of an asset in the market.
3.- In a demo account, execute a sell order in the cryptocurrency market, placing the support and resistance lines in time frames of 1 hour and 30 minutes. Screenshots are required.
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4.- In a demo account, execute a buy order in the cryptocurrency market, placing the support and resistance lines in time frames of 1 day and 4 hours.
First of all, I have entered in Tradingview website and then I have done my analysis.
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5.- Explain the “Hanging Man” and “Shooting Star” candlestick patterns. Show both candlestick patterns on a cryptocurrency market chart. Screenshot is required.
There are many charts for technical analysis, the most popular of which is the Japanese candlestick pattern. In the Japanese candlestick pattern, we see Hanging man and Shooting star candles. Usually when we find these candles on an uptrend then the reverse of that uptrend happens so I think everyone trader should have a clear idea about it. Let’s see the full explanation of the Hanging Man And Shooting Star candle.
Hanging Man
Hanging Man is a single Candle in the Japanese candlestick pattern. Generally, Hanging Man plays an important role when it is created in an uptrend. After the Hanging Man in an uptrend, we get trend reversal. That's why it is important for all traders,s especially short-time traders as well as leverage traders.
I would first like to point out to you about its external structure. The body of this candle will be relatively small and will form a long shadow or tail at the bottom. That means its opening and closing price will be close. However, it should be noted that the shadow given below should be double the body of the candle. But, there will be no long shadow on the body. Let's see a screenshot for a better understanding.
We can see in the chart above that a Hanging man candle has been identified here. When we saw this candle then we noticed the downtrend here.
Shooting Star
The Hanging Men candle that we discussed a while ago is the exact opposite of this shooting star candle that appears in a candlestick pattern. However, these two candles have some features in common, such as the shooting star candle will have a smaller body and the hanging man candle will have a smaller body. I mean, if you want to understand the psychology of the market, I can say that the opening price and the closing will be very close.
This candle will have a long upper shadow. In the Shooting Star candle, we can see very little or no lower shadow. Without which we can't call it Shooting Star candle. If the shooting star creates a candlestick pattern and the chart is an uptrend, it predicts a trend reversal. Let's see a screenshot to identify the Shooting Star candle on the live chart.
The part I indicated to give the above screenshot is a shooting star candle. And the thing I tried to point out with this candle is that the downtrend is seen after the shooting star candle.
Conclusion
Finally, I want to simply point out the things I learned and learned from today's lesson. I have highlighted the differences between technical analysis and fundamental analysis. We have learned how important it is to understand what the next movement of the market might be. The importance of our technical analysis and fundamental analysis cannot be overstated in understanding the movement of this market.
The technical analysis has to be done within the chart and to do it you need to be skillful. We need to take the help of different sources for fundamental analysis and we can take Elon Musk's tweet as an example of how it has a huge impact on the fundamental news on market.
Shooting Star and Hanging Man are the two candles we have discussed in detail. We know that when these two candles are made, the next movement downtrend takes place and from here the trend reversal starts and short-time traders can reduce their capital risk by taking knowledge from here. Thanks, professor @pelon53 for your beautiful lesson.