Concept About Trends in Cryptocurrency - Part 2

ROLES OF TRENDLINE

TRENDLINE shows a trader a good buying and selling opportunity.
Some traders uses the trendline as either support or resistance levels.

HOW TO DRAW A TRENDLINE

As stated earlier there are two types of trendlines and we will be showing how to draw a trendline for both the uptrend and downtrend.

When drawing a trendline it should be noted that one should never force a trend line to fit, if the line doesn't fit the candlestick it means it is of no use and forcing it will lead to the line misguiding you.

UPTREND

There are some simple rules that are used in drawing an uptrend line which are;
For an uptrend the trend lines are drawn below the candlestick
Atleast two lows must be attached to the line drawn for it to be a correct trend line.
Uptrend lines acts as support for the price of the asset as the price keeps rising.
The more the price gets attached to the trend line the more valid it is.

A break below the trend line shows there will be a reversal in the market price soon.

After noting this to draw a trend line, one will go to the platform where one intend to read the chart, then the analyst chooses the trend line tool and locates the best place to draw the trend line.

The analyst will draw the line in accordance to how he or she want it to be. It can either be a long trend line or a short one, depending on how the market is at that time.

It is quite imporant to follow all rules outlined above so as to get an effective uptrend trendline.

DOWNTREND

Lines are drawn above the price in a downtrend.
The lines in downtrend acts like a resistance for the price and gives us an insight that supply is more than demand meaning there is more selling than buying. .
Two highs most be attached to line drawn in other to make a trend line in a downtrend.
A break above the downtrend line means there will be a reversal soon.

To draw a downtrend line is same as the uptrend the difference is the downtrend line will be above the price of the asset.
Logon to the tradingview or binance platform and get a pair of your choice you wish to trade, in the chart session choose the trend line and draw it on the chart as desired.

Using binance, after getting the pair,click on it it will take you to the chart interface, then extend the screen, click on the pen like button after which more options will show,then click on the first line it will show you options of lines,choose trend line. In binance, they have made the lone drawing so easy, after choosing trend line all you have to do is select the 2 points you want the line to be drawn and vola you will get it.

Support lines

A support is a line drawn under the price of an asset at which it touches and then bounces back to the opposite direction in consecutive times. This means that if the price of an asset falls from a higher price let's say from $5 to $2 and the price then reverses back and moves to $4 again then comes back to that same $2 before bouncing back upward again and probably it comes down to $2 again. The $2 as acted as a support for the asset at that particular time. So any point the price touches more than once is considered a support.

Resistance

A resistance is a zone or area where the price of an asset touches and revert back in a particular time. Before the zone can be called a resistance, the price must have touched the zone more than once. If for instance the price of an asset hits $10 then retracts back to $5 and then it moves to hit $10 again it has become the zone for Resistance. A trader can actually use this to set his entry and stop loss on the chart.

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Simple chart patterns

Chart patterns is another tool used in technical analysis, they are figures in which the price of an asset form overtime while it moves in Different patterns. These patterns leads to a mega movement in the market and it is usually advantageous to traders who can identify them in other to have a better successful trade.

Ascending Triangles:

Ascending triangle is a type.of simple chart pattern where by a resistance zone and a uptrend trend line is drawn to form a triangle pointing towards the upper part of the chart. This indicates that there is a level.of resistance but the demand is getting more than the supply and it's pushing the price up because each low formed on the trend line is higher than the previous one.

Descending triangle

This is the opposite of an ascending triangle, this simple chart Pattern occurs when there is a support line drawn and a downtrend trend line are conjoin together to for a triangle pointing towards the downward part of the chart. It indicates that there is begining to be a more higher supply than demand and there will be a fall in price of the asset.

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