Hello everyone, it's nice to meet again this week, this time I will try to complete the assignment from the professor @lenonmc21 . The task this time is very extraordinary, I am very excited to do it.
All about Trends, Supports and Resistances and simple chart patterns
1. Define in your own words what is a "Trend" and trend lines and what is their role in charts?
Trend
Trend is a word that is widely used in various ways, including in technical analysis, financial trading, which is now familiar to many people. In the trending trend is something that is used to read the direction or see the price direction of an asset. From what we know now that the price of each crypto coin increases and decreases with the trend, we can learn to understand the rise and fall of crypto.
If friends have read about the dow theory there it has been explained that all crypto prices move because they are based on three trends:
- Bullish
- Bearish
- Sideways
Trend 1 Bullish
Bullish trend is formed by the presence of a pattern where the pattern is like HH-HL-HH-HL and so on until later from the pole that will form an angle that will continue to go up and formed an angle of 450.
However, there are differences of opinion here where technical analyzes issue different opinions in terms of determining the lower low level. Among the technical analysis, there are those who argue that the lower low can be declared valid if the price later manages to break the resistance level rather than the previous peak price. However, some others argue that the lower low can be declared valid if there is an increase after it reaches 50% of the decline that occurs at the peak.
Even though there are differences in the opinions of technical analysis in terms of determining the lower low level, they still have the same goal in order for each of their opinions to gain trust. Usually the opinion of the first technical analysis is used for those traders and also the analysts who have developed. As for the opinion of the second technical analysis, traders and aggressive analysis usually use it.
Trend 2 Bearish
This second trend is a bearish trend, this trend has a pattern where LL-LH-LL-LH and this trend is the opposite of the previous bullish trend which formed an angle of 450 up but the bearish trend formed a 450 angle down.
Here also still have similarities with the bullish trend where technical analysis still has differences of opinion to determine the right lower high. The opinion of the first technical analysis says that the lower high can be confirmed to be valid if the support level that has been formed at the lower low can be broken, then the lower high can be confirmed to be valid. While the second opinion from technical analysis says that the lower high can be confirmed to be valid if the price has decreased by 50% from the previous price.
Trend 3 Sideways
The third trend, Sideways, is formed based on a pattern of price moving in a small scope. This means that the price of cryptocurrencies does not experience a massive increase or decrease. This is one of the reasons why some traders use sideways for short-term trading only and there are also those who choose not to try in this condition because it is too risky.
Trend Line
Trend Line is a part of the results of the most common technical analysis in terms of trending. However, if we have to compare the trend line, support and resistance, the trend line is the least used. Basically, if the trend line is used correctly, the trend line has a pretty good accuracy. But what is unfortunate here is that traders often use it incorrectly, they only follow what is happening in the market, but not with the correct rules of the Trend Line.
The role of trend lines
To draw a trend line is not difficult enough, but you should know that there are two types of trend lines, both of which are uptrend and downtrend.
Not much different from Uptrend Downtrend there can be found or seen when market conditions are experiencing a price decline.
2. Explain how to draw an uptrend line and a downtrend line.
Here I will try to explain and illustrate the difference between Uptrend and Downtrend.
Uptrendline
As we all know that Uptrend is part of the trendline. Uptrend is also part of a combination of 2 words, namely Up which means Up while Trend means inclined. So Uptrend when viewed from a straight line connected at the lowest point with at least 2 points, Therefore Uptrend is a market condition with prices rising. In question no. 1 I have explained about Bullish if you can understand Bullish you can easily understand Uptrend because Uptrend is a synonym for Bullish.
Downtrendline
Downtrend is part of the Trendline when viewed from a straight line drawn by connecting the highest point, then it explains that market conditions are undergoing a downward process. Downtrend is also not much different from Bearish if you can understand Bearish then you have no difficulty in drawing Downtrend.
3. Define in your own words what Supports and Resistances are and how we can identify both zones.
Supports
Support is like giving support to people who are in a falling phase. Likewise with the support that is in treading. When they are on the verge of collapse there are investors who come and will help to prevent prices from falling continuously. At the support there is a change that was initially in the form of a Downtrend to an Uptrend. When the market price is in a support position, there will be many traders who predict that the price will rise soon.
Resistances
Resistance is the opposite of support here investors do not come to help but prefer to take profits by selling their property. This is also what often makes the market experience a slowing system and sometimes there are some markets that choose to close their markets. However, if you are not careful in this position, the market price may drop suddenly and drastically.
4. Explain in your own words at least 2 simple chart patterns.
Here I will try to explain Double Tops and Bottoms basically this Double Top and Bottom pattern is very rare in the market. There needs to be knowledge for investors to pay attention to charts where the peaks do not always have to be the same so that the M or W pattern can appear.
Double Tops
Double Top is a pattern where the pattern is formed from successive rouding tops. In the double top, there is usually a reversal from bearish to bullish, therefore later the double top will have a similar conclusion. This double peak can cause a rare occurrence where investors are looking for the biggest profit because it will be the end of a bearish trend which will later turn into a bullish trend.
Double Bottom
Double Bottom is the opposite of Double Top. Later it is certain that the results of these two are two opposite sides. The pattern of the Double Bottom will usually occur at the end of a bearish trend. At this level, investors are looking for safety and will eventually go to the support level. Later this Double Bottom will show a bullish reversal that benefits investors from the bullish rally.
Conclusion
Trend is a word that is widely used in various ways, including in technical analysis, financial trading, which is now familiar to many people. In the trending trend is something that is used to read the direction or see the price direction of an asset.
Trend Line is a part of the results of the most common technical analysis in terms of trending.
To draw a trend line is not difficult enough, but you should know that there are two types of trend lines, both of which are uptrend and downtrend.
Sorry if there are words and writing that are wrong, if other friends want to comment, please comment in the comments column below.
Thank you for reading my writing, see you in the next assignment.
Best regards @karimjz
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@lenonmc21