Steemit Crypto Academy |S6W1 - Homework Post for Professor @pelon53

Hello everyone. I'm glad to participate in the homework for this new season. It's always a pleasure to learn from the professors and test our skills with the homework. Thanks for joining me on this

In your own words, what is fundamental analysis? Do you think it is important for a trader? Justify the answer.

First and foremost, fundamental analysis has been the bedrock of understanding whether a business is struggling or gallant. Every financial institution/product have their aims, targets, and roadmap. But how can investors understand whether they are liquid or watery? It's through fundamental analysis. What I'm trying to explain is that it's only through fundamental analysis we can ascertain whether a company is undervalued or overvalued

One of the things to put into consideration is the market capitalization of a company or an asset. It clearly tell you the value of a company. A company or an asset is said to be undervalued if its price to sale ratio is less than 1, and if it's greater than 1, it's overvalued. We can only know all this through fundamental analysis

Fundamental analysis is used to know or see the clear picture of the intrinsic value of an asset. In other to do a fundamental analysis on a particular cryptocurrency, we would need to get the information about the currency. We would check the coin market cap, volume, roadmap, use cases, market capitalization, and so on. All these can be used to do fundamental analysis to know whether the asset okay or not to invest in

To do fundamental analysis, information about an asset can be gotten on their website, or the white paper. Every project must have what they want to sell to the public either product or services. If a project have nothing valuable to offer, it's through fundamental analysis we can know. I do say something but I don't know if people would agree with me

The fundamental analysis is the best thing to do before investing. Technical analysis comes in later after certifying that an asset is worth trading or investing.

My quote.

Fundamental analysis is important for a trader because it focusses on the objective measures of an asset potential value and it can really give a trader the necessary information needed to invest in an asset or not. In forex, one of the greatest fundamentals is the news. The news about a particular asset cause spike, and if a trader is lucky enough to get it right, he would bag enough profit

Fundamental analysis is very important because it give trader/investors an insight on the liquidity rate and also whether the asset or the company is over or undervalued by ascertaining the level of demand and supply

Explain what you understand by technical analysis and show the differences with fundamental analysis.

Technical analysis is one of the approach a trader takes when trading. We've talked about the fundamental analysis, and now, it's about technical analysis. Technical analysis is all about forecasting. The market movement is predicted and a trader invest by either buying or selling. They predict the price movement and the direction of trend, and this allow the traders to know the entry and exit point in the market.

There are tools for technical analysis. Tech analysis cannot be done without tools. There are various tools that traders can use for their technical analysis. We have RSI, stochastic, fractal, ichimoku cloud, and the host of others. All these indicators are designed as already made.All the information needed has been incorporated so there's no need for any manual calculations because every thing is incorporated mathematically, and it's automatic.

So the indicators can be used to predict the current, and the future price of an asset and it can also be used to analyze the past price in relation to the current and future price. It helps the traders to hammer out their unique trading strategy, and help to trade on daily basis.

Technical trading looks very much arbitry because there are bunch of lines and candle sticks to read. But there are more to it. Technical analysis has been in existence for donkey years and the candle sticks we see on many charts was invented more than 300 years ago by a japanese named Munehisa Homma in 1775.

Technical analysis focuses on price actions and almost all the things around the technical analysis revolve around the candle sticks. Each candle sticks on every chart is an identification of the price actiondepending on time frame used. If a chart is set for 5 hours, each candle would reprent 5 hours trading activities, and so on. The candles are either green or red. The red candle stands for a bullish movent while the red represents a bearish movement.

There are several indicators used for technical analysis. Let's see the image below

Screenshot (551).png

Above are a few list of the technical indicators used by traders.

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.

Screenshot (554).png

Screenshot (555).png

From the image, I drew a support line and placed a trade using 30 minutes time frame after there was a reversal. The buy trade I pulled yielded some profit as we can see from the image. It's known that when the price of an asset maintains either support or the resistance level, a reversal is a signal to either buy or sell.

Screenshot (558).png
The above image represent a 1 hour time frame. The resistance level was considered to place a sell trade as shown in the image. The price of the asset at the point of resistance could not move further by breaking the resistance, so there's a reversal which signifies a downward movement.

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.

Screenshot (559).png

The image above shows 1 day time frame using a resistance line to determine the price movement of an asset. For a few days, the price of the asset could not move above the drawn line and a it stands, the price tends to go down further because it's still far from the support level and the bears are taking the market as we can see that red candles keeps forming. If at a point there's a reversal, there's tendency that the resistance level would still be active and if stop loss is place close to that level, it would favour the trader because reversal is imminent at the resistance point.

Explain the “Hanging Man” and “Shooting Star” candlestick patterns. Show on a cr market chart

Conclusion

If you want to be a good trader, you should learn how to use both technical and fundamental analysis because they both have their advantages that could help a trader on a short and long term basis. Many people argue which is the best. I think both are very important when it comes to trading.

The fundamental analysis as I understand is better used for a long term prediction while the technical analysis can be used in a short time frame.

We hshould also not forget that the sentimental analysis also play an important role in the market. peoples reaction can trigger dump or accumulation.

Thanks for reading.

This is ckole the laughing gas

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