Crypto Academy / Season 3 / Week 8 - Homework Post for professor @cryptokraze - Trading Sharkfin Pattern
Good day everyone. Thanks to @cryptokraze for such a wonderful lecture on Trading Sharkfin Pattern. I will be doing the homework from the lecture, so sit back and look for somewhere quite quiet and comfortable as you read through this amazing article I created just for you(😉). Let's get started!!!
Question 1: What is your understanding of Sharkfin Patterns.
The sharkfin pattern occurs when there's a strong trend movement of price towards a direction, be it upward or downward price movement, and then a sudden reversal in the trend movement. For instance, a strong upward price movement and boom!! a sudden strong downward price movement.
The sharkfin pattern forms a V shape, because of it's trend reversal and that's the reason for it's name. A shark fin is V shaped and this trend pattern is V shaped.
To fully comprehend, what I'm saying, let me show you an illustration below of an uptrend reversal Sharkfin pattern.
Below is an illustration of a downtrend reversal Sharkfin pattern
Question 2: Implement RSI indicator to spot sharkfin patterns.
RSI indicator is known to detect trend reversal and implementing it to spot sharkfin patterns, is a trend confirmation strategy.
Let me show you how you can make use of the RSI indicator to detect/spot an uptrend reversal sharkfin pattern.
Let me also show you how you can make use of the RSI indicator to spot a downtrend reversal sharkfin pattern.
Question 3: Write the trade entry and exit criteria to trade sharkfin pattern.
Buy Position
Entry Criteria
Wait for the V shaped Sharkfin pattern set up
Ensure your RSI line is starting to rise above 30, meaning, it must be below 30 initially.
As soon as the RSI line is above 30, place your buy entry position there.
Exit Criteria
Place your Stop Loss position some pips below the tip of the V shape formed
You can make use of RR 1:1 or RR 1:2, to know where to place your Take Profit position. For me, I will be making use of RR 1:2 to place my Take Profit position.
Sell Position
Entry Criteria
Wait for the invented V shaped Sharkfin pattern set up
Ensure your RSI line is starting to fall below 70, meaning it must be above RSI line 70 initially.
As soon as the RSI line is below 70, place your sell entry position there.
Exit Criteria
Place your Stop Loss position some pips above the tip of the invented V shape formed.
You can make use of RR 1:1 or RR 1:2, to know where to place your Take Profit position. For me, I will be making use of RR 1:2 to place my Take Profit position.
Question 4: Place at least 2 trades based on sharkfin pattern strategy
Demo Trade 1 - AXS/USDT
Demo Trade 2 - MATIC/USDT
Conclusion
The Sharkfin trading pattern is quite reliable in detecting/spotting trend reversal, which is a very cool and simple way for traders to take profit from the market. Using RSI indicator to further confirm trend reversal, makes it even more reliable. I personally feel this strategy is best for scalp traders, as it quite relies on traders to make quick profit from quick trend reversals. This is a very good trading pattern.
Special thanks to you, @cryptokraze, for organizing this amazing class and giving this nice assignment, as it has helped me in understanding Trading Sharkfin Pattern.