Understanding Trends-Crypto Academy / S5W1- Homework Post for @reminiscence01
Q1(a) WHAT DO YOU UNDERSTAND BY A TRENDING MARKET?
Trend is known as the overall direction in which market values or asset prices change. The structure of a trend might be bullish (upward), bearish (downward), or range (also known as flat).
When a market is uptrending, the price makes higher highs and lower lows. A market in a downtrend is defined as one that produces lower highs and lower lows. In a ranging market, price tends to be constrained above and below by persistent levels of support and resistance.
b). WHAT IS AND BULLISH AND A BEARISH TREND? (SCREENSHOT REQUIRED)
A bullish trend is when the price of an asset rises. Bulls (buyers) believe that the markets will rise. A bull market is one that is rising steadily over time. In a bull market, buyers rule the market and keep driving up the price of the asset by purchasing it. So, if a news speculation claims that the majority of analysts believe cryptocurrency is headed for a "bull market," it suggests that those analysts anticipate the asset will begin a long-term upswing, with values growing consistently. As a trader, you may share this sentiment and become bullish on stocks in the hopes of seeing a particular asset appreciate in value.
The term "bearish" refers to an asset that is losing value. The bears (sellers) anticipate the market will continue to decline. A bear market is a market that has been in decline for a long time, with prices constantly falling. Sellers have entire control over the market in a bear market and continue to raise selling pressure, leading the asset's price to decrease. So, if a news broadcast reports that the majority of analysts in a given industry feel we're headed for a "bear market" in stocks, it means those analysts expect equities will begin a long decline, with prices falling gradually for a long time.
Q2. EXPLAIN THE FOLLOWING TREND IDENTIFICATION AND GIVE AN EXAMPLE OF EACH OF THEM. (ORIGINAL SCREENSHOT NEEDED FROM YOUR CHART). DO THIS FOR a BULLISH AND A BEARISH TREND. i) MARKET Structure. ii) TRENDLINES
The market structure of a crypto asset reveals the current trend of the asset. It aids traders in gaining an understanding of the current situation of the asset. It assists in determining when to enter or depart the market.
- Bullish Trend Market Structure
In a bullish market pattern, it produces a series of higher highs and higher lows. The market rises, then falls for a brief respite before rising again. After the pullback, the market will resume its upward trend, breaking above the previous swing high and heading higher. This is something it does all of the time. This is usually the best time to buy or sell something.
- Bearish Trend Market Structure
The bearish market structure is characterized by a series of lower highs and lower lows. The market falls lower, rebounds back, and then drops lower again, smashing the previous low, and this pattern continues. This is usually the moment to sell or short.
Traders use trendlines to examine market behavior as a technical tool. Any two pivot points can be used to build a trendline; a pivot point is simply when the price changes direction from down to up, or up to down, establishing a price pivot.
- Bullish Trendlines
The bullish Trendlines serves as a level of market price support. When the asset nears or breaks the bullish Trendlines the price bounces back. Traders may also take advantage of this purchase opportunity.
- Bearish Trendlines
The Bearish Trendlines serves as a level of market price resistance, When the asset nears or breaks a bearish trendline, the market price falls. Traders may also take advantage of this sell opportunity.
EXPLAIN TREND CONTINUATION AND HOW TO SPOT THEM USING MARKET STRUCTURE AND TRENDLINES. (SCREENSHOT NEEDED). DO THIS FOR BOTH BULLISH AND BEARISH TRENDS.
Trend continuation can be defined as when the chart pattern is closed, the price will continue to move in the same direction as it did before the chart pattern was closed.
Some will profit and exit as long as the trend continues, while others will enter a new position when the price is low. There are two important points in both a bull and bear trend.
- Bullish trend market structure:
1). The new high in a bullish trend must be higher than the prior high.
2). The new low has to be higher than the prior one.
- Bearish Trend Market Structure:
1). Lower highs are seen in a bearish trend. To put it another way, the new high must be lower than the prior one.
2). The new low has to be lower than the previous low.
- Bullish Trendlines
Trendlines are a useful tool for identifying whether or not a trend will persist in the market structure. The trendline functions as a support level when there is a positive trend. As can be seen on the chart, the market hits the trendline and rises higher than previously. It suggests the probability of a reversal when it crosses the trendlines.
- Bearish Trendlines
The trendline works as a level of resistance in a bearish trend. When the asset's price reaches the trendline, it begins to pull down. It hits the ground with more force than before. If it crosses the trendlines, on the other hand, it simply indicates that the trend has been broken and that a reversal is possible.
PICK UP ANY CRYPTO-ASSET CHART AND ANSWER THE FOLLOWING QUESTIONS.
I'll use the TLM/USDT trading pair for my analysis, at 2 hours timeframe. On Tradingview's TLM/USDT chart, we can observe that a range market was developed first, before it broke and became a downtrend. The price of TLM bounced back when it hit resistance or support levels, and no obvious trend can be seen. The significant amount of traders enter and exit the market at the support and resistance levels, respectively. After a long struggle between the buyer and the seller, the price broke through the support and headed lower.
This asset is now on the bearish trend. The asset's price continued to decline after breaching support in the furious market, producing low highs and lower lows. As depicted in the chart above. I drew a trendline as resistance to identify the trend, which the price hit twice and created two lower highs.
CONCLUSION
Most traders' trading strategies are determined by the market's state: whether it is trending or range. A ranging market's trading technique, as well as the indicators to utilize in a ranging market, varies from a trending market's. The trend on the other hand is very important, and it should be the first thing a trader must know before taking a position or studying an asset. I was able to convey my understanding of trends and markets, as well as the many types of trends and markets. I was also able to show how to use charts, market structure, and trend lines to identify a trend.
Professor @reminiscence01 is one of the best professor, I don't know how much I can appreciate you for the opportunities you have given to me. God bless you 🙏😇.
Thanks to the Steemit team also, and to all my dear readers I say a very big thank you!
Hello @mistural , I’m glad you participated in the 1st week Season 5 of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:
Observations:
Break of the trendlines violates the current bullish trend and signals a trend reversal.
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