Im glad to be part of this lecture i will try to understand it and work on my assignment to the best of my capability
lets get started...
Question 1
Market Structure
Market structure is the movement of prices in a graphical representation of an asset. This price movement can be either in uptrend, downtrend or even sideways or in a range. This gives traders data and information which will help them enhance their trading activities.
The price movement of an asset hugely depends on the the buying and selling of a token asset which create the wave-like movement of the prices. The price movements creates resistant and support lines.
The price Uptrend , downtrend and sideways movement are all market situation that signal the traders with an information to capitalise on.
Uptrend Market Structure
Uptrend is a type of a market structure which its price move upwards. it is a representation of price movement with a series of swing highs and swing lows.. In this situations every swing is always higher than the previous swing.
From the graph above we can see that from December the price of the asset starts to go higher to where it starts to decline at (1) the reversal extends to (2) the swing extended to as such till almost the end of the year.. From observation we can see that every swing is higher than its previous swing.
Downtrend Market Structure
Downtrend is a market structure with its price moving upward the chart. It is a representation of price movement with a series of swing highs and swing lows.. Unlike the Uptrend, In this situations every swing is always lower than the previous swing.
From the graph above we can observe that the price has hugely increased masively and this is because more traders have massively bought the token which affects the price of the token. Just like with the uptrend, the price starts to decline to which every swing is always lower than its previous swing.
Sideways Market Structure
This price market structure moves in a range set of price. This price movement creates resistance and support and it moves within the range until it gets the power to break either the support resistance.
Question 2
Higher High
Higher-high is a type of uptrend which its current price is always higher than its previous price. This tend to happen when a resistance level is broken to create another resistance level which is higher than the previous resistance. We should take note that with a higher high, the previous resistance must be lower than the current one.
Lower High
Lower high is a type of downtrend to witch its current price is always lower that its previous price. Its movement begins when a support breaks, which tends to create another support that is lower than the previous support and so on till the support cant be broken no more.
Question 3
In trading we can spot trend reversal in two ways which are in a Uptrend movement and Downtrend movement. Before we can get it right there are conditions we have to look out for in a chart and with the help of the higher lows and lower highs we can identify them.
Uptrend Reversal
- The first condition we will have to look out for is the lower highs in the uptrend movement and identify them.
- The second thing we have to do is to mark the support line of the chart so we can identify or know when the price break through the support line.
- Now we will wait till the price make a clear breakout out of the support line.
From my graph above we can see that i was able to identify the three higher highs before a subsequent lower high. I then made a support line so i can be able to detect when the price breaks the support. After it breaks the support line, This tells us there is a trend reversal that will be happening soon, so we can take advantage on i to make some profit off the market.
We should note that all these conditions needs to be met before this trend reversal can perfectly work.
Downtrend Reversal
This is also just like the uptrend reversal but in an opposite way. This reversal also require the conditions to be met.
- We look out for the higher low in the downtrend movement and identify them.
- We need to mark the resistance line
- wait to see the price make a clear breakthrough the resistance line.
From my chart above i was able to identify the lower lows and the lower high. After which the price shoot up massively breaking the resistance line.
Question 4
For a Buy trade entry
This type of entry requires the market to be in downtrend so you can easily make profit as they is a high chance that the market will recover. There are conditions that needs to be met before we make entry.
- Look for the higher low after multiple of lower lows
- identify the resistance or neckline
- make sure there is a clear breakthrough of the resistance line.
We make entry when the price break the resistance or neckline and wait for the price to shoot up.
For a Sell trade entry
For a sell entry trade which require the price or chart to be in an uptrend movement. Now we will look at the necessary conditions to be met.
- look for lower high after multiple of higher high.
- identify the neckline
- make sure there is a clear breakthrough the neckline.
After these conditions are met we sell our trade just above the breakout as we are still in profit.
Exit criteria
Traders exit the market when they are in profit and when they are in loss. Now lets take each of them
Exit in Loss
To manage our initial capital we invested into crypto we have to set a stop-loss for every trade we make. This is very important because sometimes we dont have time to always check how the market is doing. Stop-loss will keep safe our asset by automatically exiting the market for us.
Its advised to always set our stop-loss in a 1-1 risk-reward ratio. Stop-loss is set just above the lower high for a sell trade or below the higher low for a buy trade.
When the price meet the stop-loss requirement, it executes it by exiting the market automatically when when you not even around.
Exit in Profit
It is important every trader set his entry and exit level by creating a stop-loss. So we should know our exit point which should be in profit.
We have to manage our risk reward in setting our target profit. I recommend a risk-reward ration of 1-1, 1-2 or even 1-3. We need to set realistic target so we can achieve them.
Our stop-loss that we set will execute immediately the price meet the requirement of the stop-loss.
Question 5
Demo Trade 1 (DOGEUSDT)
Using an hour candle stick chart, i was able to Spot some multiple lower low before a subsequent higher low which gives me an indication the price will go bullish. So i need to place my neckline so i can identify the time of break through the neckline.
After the price go clearly above the neckline i place my order to make an entry. After making an entry it is important set you takeout profit.
Demo Trade 2 (SLPBUSD)
Using an hour candle stick, i was able to spot multiple higher highs before a subsequent higher low. This gives me an indication that the price will go bearish so its important i set my exit point just after the break through the neckline.
I was really finding it difficult using my Tradingview for the demo trade. Some Navigations wouldnt allow me and the deadline is fast approaching.
The crypto market price is volatile so with the help of the Market Structure Strategy we can use to predict the market trend to mark profit. Its very important to every trader and it requires experience before one can get it right. Although it doesnt always mean it will work as you predict but the chance of its going our way is higher. Which is also why we always need to make a stop-loss so you dont loose you initial investment