Steemit Crypto Academy – Season 3 - Week 2 - Post for @cryptokraze

Question 1 - What do you understand about Market Structure?

In the world of cryptocurrency markets, market structure is one of those terms that come up a lot due to its importance in the market and as such forms one of the core basis when it comes to cryptocurrency trading. A market structure is basically how people take advantage of the market or how the market moves. It is simply seen as the pattern of the price actions taken by the market to move from a particular price point to another price point. The market always moves in patterns, it moves in a wave pattern, in high-highs and high-lows, lower-highs and lower-lows, and sideways.

The market creates impulses and also creates corrections. In the market, during an uptrend movement, the market creates higher-highs and during a downtrend, the market creates lower-lows. To demonstrate how this is seen in the market and how people take advantage of the market, when the market is in an uptrend and creating higher-highs, liquidity decreases and people start selling to take profit because they have incurred a lot of profits and they think that the price is high, this selling pressure turns the market into a correction that sees the market move in a downtrend and this cycle or structure repeats.

Uptrend market structure

In the uptrend market structure, the market moves in a wave-like pattern and is seen to create higher-highs and higher-lows. The trend will continue to rise in that direction until it begins to show signs of weakness when the market does not create a higher-high, and sees the market create lower-low. To demonstrate this uptrend market structure, I will be using the Binance Coin, BNB/USDT chart to show the wave-like pattern formed in the uptrend movement, creating higher-highs and higher-lows.

BNB/USDT Chart

Downtrend market structure

In the downtrend market structure, the market also moves in a wave-like pattern and is seen to create lower-lows and lower-highs. The trend will continue to fall and create lower-highs in that direction. The trend ends when the marker reverses and begins to create higher-highs or equal lows which is a sideways movement. To demonstrate this downtrend market structure, I will be using the ETH/USDT chart to show the wave-like pattern formed in the downtrend movement, creating lower-highs and lower-lows.

ETH/USDT Chart

Question 2 - What do you understand about Lower High and Higher Low?

Lower-High

In the cryptocurrency market, a lower-high is formed after the most recent higher-high from an uptrend. In an uptrend movement, the market moves in a wave-like pattern and is seen to create higher-highs and higher-lows. The uptrend trend will continue to rise in that direction until it reverses and shows sign of weakness when the market does not create a higher-high, and sees the market create lower-highs and lower-lows. This is as a result of the market reversing because of the market exhaustion and selling pressure from people who are taking profit and selling in anticipation of a downtrend. To demonstrate the lower-high pattern, I will be using the BNB/USDT chart to show the various lower-highs.

BNB/USDT Chart

Higher-Low

In the cryptocurrency market, a higher-low is created right after the most recent lower-low from a downtrend. In a downtrend movement, the market moves in a wave-like pattern and is seen to create lower-highs and lower-lows. The higher-low is created after a lower-low in a downtrend. In a downtrend, trend will continue to fall and create lower-highs and lower-lows in that direction until the downtrend ends when the market reverses and begins to create higher-highs and higher-lows. The higher-lows are created to show a reversal in the downtrend. This is as a result of a correction or reversal in the market due to buying pressure of people who are buying in anticipation of an uptrend. To demonstrate the higher-low pattern that is formed, I will be using the ETH/USDT chart to show the various higher-lows.

ETH/USDT Chart

Question 3 - How will you identify Trend Reversal early using Market Structure Break?

One of the main characteristics in the cryptocurrency market is reversals in trends. This is normal after the market trend has moved in a certain direction. However, identifying the trend reversals early can be tricky and can greatly impact how much profit is made if it is done correctly. In my opinion, to identify trend reversal in the market early, I will pay attention to certain situations.

In an Uptrend, One of the things I will look out for is the break of structure. We all know that when the market is in an uptrend, it create a wave-like pattern that consists of higher-highs and higher-lows. The trend structure breaks when there is market creates a lower-high and a lower-low. For me, this is the first clue that might signal the market reversing from an uptrend. Using the ETH/USDT chart, we can see the lower-high at around $2600. The price broke below the previous support at around $2540 which for me was an early indication that the market could be heading into a reversal.

@cryptokraze