Crypto Academy / Season 3 / Week 4 - Homework Post for @cryptokraze by jehoshua-shey

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· @jehoshua-shey · (edited)
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Crypto Academy / Season 3 / Week 4 - Homework Post for @cryptokraze
<div class="text-justify">

![untitleddesign_1_original-154.png](https://cdn.steemitimages.com/DQmRCnMACsf6gZxQLtrVSpY3XaMq8omDU2F8ESyJbo8zdq4/untitleddesign_1_original-154.png)

![my line.png](https://cdn.steemitimages.com/DQmZTdgawKsDHmYHPUzT1mnF38o3UuqwFRzSTxE7VbcL3Um/my%20line.png)

## THE CONCEPT OF DYNAMIC SUPPORT AND RESISTANCE
Normally, support and resistance are regarded as price levels on the chart from where the price seems to rebound, return, or do a V-turn. At support, the price stops going further down and begins to go up, while the reverse is the case for resistance. Normally, these price levels are marked as an imaginary horizontal line on the chart.

For Dynamic support and resistance, however, the price levels don't follow a horizontal arrangement, instead, there is a distinct diagonal pattern that develops. Here, support and resistance levels are marked as an imaginary diagonal line.

### DYNAMIC SUPPORT ON CHART
Let's take an example of dynamic support with a TRON/TetherUS chart on a 30min timeframe.

<center>
![dyn-2.png](https://cdn.steemitimages.com/DQmbvdKaunWTfcseyGnZjd6tTCq5zvQkKEo3NGxCj79cXF7/dyn-2.png)
</center>

From the image above, we see different points at which the price seems to go back up upon touching the exponential moving average line. Evidently, the EMA is acting as dynamic support in these points.

### DYNAMIC RESISTANCE ON CHART
Let's take an example of dynamic resistance with a TRON/TetherUS chart on a 30min timeframe

<center>
![dyn-1.png](https://cdn.steemitimages.com/DQmXdY38TWD1SEFUX2eHHCcD3ykvhbCJff2MjUApi6bQcAc/dyn-1.png)
</center>

From the image above, we see different points at which the price seems to return downwards upon touching the exponential moving average line. Evidently, the EMA is acting as dynamic resistance in these points.

![my line.png](https://cdn.steemitimages.com/DQmZTdgawKsDHmYHPUzT1mnF38o3UuqwFRzSTxE7VbcL3Um/my%20line.png)

## USING EMA 30 & 15 TO SHOW DYNAMIC SUPPORT AND RESISTANCE
Combining two EMAs can give a clearer insight into dynamic support and resistance. Here, EMA 30 & 15 are combined to show dynamic support and resistance.

### DYNAMIC SUPPORT WITH EMA 30 & 15
Below is dynamic support shown on a Cardano/TetherUS chart in a 30min timeframe.

<center>
![dyn-8.png](https://cdn.steemitimages.com/DQmRwr6nCcqhcEbDZbdyWWDKB3RTtw72VM7T5Pmf49GccTP/dyn-8.png)
</center>

From the image above, we see points at which the support respects the EMA 30 & 15. At those points in circles, the support doesn't significantly go below both EMA 30 & 15

### DYNAMIC RESISTANCE WITH EMA 30 & 15
Below is dynamic resistance shown on a Dogecoin/TetherUS chart in a 30min timeframe.

<center>
![dyn-7.png](https://cdn.steemitimages.com/DQme3sH9C7iQtz2Ki6VMYCkwt5NT269g71TPxuz67pqe7n4/dyn-7.png)
</center>

From the image above, we see points at which the resistance respects the EMA 30 & 15. At those points in circles, the resistance doesn't significantly go above both EMA 30 & 15

![my line.png](https://cdn.steemitimages.com/DQmZTdgawKsDHmYHPUzT1mnF38o3UuqwFRzSTxE7VbcL3Um/my%20line.png)

## TRADE ENTRY AND EXIT CRITERIA FOR BUY AND SELL USING DYNAMIC SUPPORT AND RESISTANCE
Here's a guide on entering and exiting both buy and sell trades, using dynamic support and resistance

### TRADE ENTRY

#### BUY 
To identify a valid entry position for a buy trade, you will need to combine EMA 50 & 100. Then you can check with the following criteria

* The price must have crossed over both EMA 50 and 100, especially EMA 50.

* The price should not just cross over, wait for at least the next candle above EMA 50 before entering the trade. 

* When the price has crossed over and above EMA 50, if the next candle forms above EMA 50 and is upward bound, it's a good indication of a buy entry.

It is possible to get more than one buy entry if we enter early into the trade. A good instance is shown in the image below. 

<center>
![dyn-3.png](https://cdn.steemitimages.com/DQmbq23kruKXmjHJPu3MAoiQDZa5HCTVues13a6tY8k3cfE/dyn-3.png)
*TRON / TetherUS chart in a 30min timeframe showing buy entry criteria*
</center>

#### SELL 
To identify a valid entry position for a sell trade, you will also need to combine EMA 50 & 100. Then you can check with the following criteria

* The price must have crossed below both EMA 50 and 100, especially EMA 50.

* The price should not just cross below, wait for at least the next candle below EMA 50 before entering the trade. 

* When the price has crossed below EMA 50, if the next candle forms below EMA 50 and is downward bound, it's a good indication of a sell entry.

It is possible to get more than one sell entry if we enter early into the trade. A good instance is shown in the image below. 

<center>
![dyn-4.png](https://cdn.steemitimages.com/DQma79wbQNZhUWFHLeUfJvnXtMz9VdQKjpZmP7dgAHouN3i/dyn-4.png)
*TRON / TehtherUS chart in a 30 min timeframe showing sell entry criteria*
</center>

### TRADE EXIT

#### BUY
To know when to exit a buy trade, we just need to first identify a good level to set our stoploss then apply a risk to reward ratio to get our take profit. The following criteria show the ideal point for stoploss and take profit levels.

* Buy entry is made above the EMA 50, but stoploss level should be placed **below** EMA 100.

* The risk to reward ratio can be determined by the trader but for the purpose of the course, the professor suggested 1:1.

* Take profit should therefore be set at a level equal to stoploss level (by difference from entry level). This means that if stoploss is $1 below entry, take profit should be $1 above entry.

* If set automatically, the trade will exit once either of the stoploss or take profit level is reached.

* If not set automatically, exit the trade once it gets to the stoploss level (to avoid further losses) or the take profit level (to secure profit)

<center>
![WhatsApp Image 2021-07-20 at 10.11.08 PM.jpeg](https://cdn.steemitimages.com/DQmNcHaJJydvuDwGUo7Meos9yRUhfiEWNDyoyeLLt5Dv9fY/WhatsApp%20Image%202021-07-20%20at%2010.11.08%20PM.jpeg)
</center>

#### SELL
To know when to exit a sell trade, we also need to first identify a good level to set our stoploss then apply a risk to reward ratio to get our take profit. The following criteria show the ideal point for stoploss and take profit levels.

* Sell entry is made below the EMA 50, but stoploss level should be placed **above** EMA 100.

* The risk to reward ratio can be determined by the trader but for the purpose of the course, the professor suggested 1:1.

* Take profit should therefore be set at a level equal to stoploss level (by difference from entry-level). This means that if stoploss is $1 above entry, take profit should be $1 below entry.

* If set automatically, the trade will exit once either of the stoploss or take profit level is reached.

* If not set automatically, exit the trade once it gets to the stoploss level (to avoid further losses) or the take profit level (to secure profit)

<center>
![WhatsApp Image 2021-07-20 at 10.11.09 PM.jpeg](https://cdn.steemitimages.com/DQmZkqFngYCSk3X4vqa5JqoWjr9MXJigWLDsGzqBn3asXc8/WhatsApp%20Image%202021-07-20%20at%2010.11.09%20PM.jpeg)
</center>

![my line.png](https://cdn.steemitimages.com/DQmZTdgawKsDHmYHPUzT1mnF38o3UuqwFRzSTxE7VbcL3Um/my%20line.png)

## DEMO TRADES TO SAMPLE DYNAMIC SUPPORT AND RESISTANCE
I carried out two demo trades to sample this technique. I used the dynamic resistance for the two trades, they were both sell trades

### Trade 1 - ETH/USDT

* Observe that my sell entry was at the next candle after the candle that made contact with the EMA 50.

* Also observe that my stoploss was slightly above the EMA 100

<center>
![untitleddesign_1_original-118.png](https://cdn.steemitimages.com/DQmPFjWA5z3y4LjfqDDk8DCuy4iMKtJuPJ3ugCdq9yJwGJ2/untitleddesign_1_original-118.png)
</center>

**Trade details:**

Trade type: Sell trade

Entry point: $1783.04

Take profit: $1726.08

Stoploss: $1840.00

The trade exited at the stoploss as the price went up instead. I used OCO order on binance for my exit criteria.

**Proof of trade**

<center>
![Screenshot_20210721-123500_1.png](https://cdn.steemitimages.com/DQmQQfcbt9hnFyN1XpJUKdQNMGjYRDvLZJvfX16w6mFpzBk/Screenshot_20210721-123500_1.png)
</center>

### Trade 1 - LINK/USDT

* Observe that my sell entry was at the next candle after the candle that made contact with the EMA 50.

* Also observe that my stoploss was slightly above the EMA 100

<center>
![untitleddesign_1_original-124.png](https://cdn.steemitimages.com/DQmTfCKuaX7834fTzHMsCM6zstPRjq4s59dMB6k2i2ZKtvo/untitleddesign_1_original-124.png)
</center>

**Trade details:**

Trade type: Sell trade

Entry point: $13.874

Take profit: $13.318

Stoploss: $14.430

The trade exited at the stoploss as the price went up instead. I used OCO order on binance for my exit criteria.

**Proof of trade**

<center>
![Screenshot_20210721-124733_1.png](https://cdn.steemitimages.com/DQmdfiB2eheXJwv6jJKwZwWKUnT6aNyoxzdA7nEjBkrpz7G/Screenshot_20210721-124733_1.png)
![Screenshot_20210721-124916_1.png](https://cdn.steemitimages.com/DQmNTq8zEJBkhSc3wQPsKMQVsuKBcJ8RMvivLyLeXhqHUbE/Screenshot_20210721-124916_1.png)
</center>

![my line.png](https://cdn.steemitimages.com/DQmZTdgawKsDHmYHPUzT1mnF38o3UuqwFRzSTxE7VbcL3Um/my%20line.png)

## CONCLUSION
With the uncertainties bugging crypto trading, truly, one can't but use the numerous technical strategies and indicators available. 

Dynamic support and resistance using EMA can be a useful indicator for a trader who wants to ride the trend in a trending market. When using the EMA, two different EMAs will be needed to identify entry and exit points in the trade. This trade could either be a buy or sell trade.

Ideally, EMA 50 and 100 can be used. This can give important entry and exit suggestions and it is to be used with a stoploss and yake profit to minimize losses and secure profits respectively.

The dynamic support and resistance strategy is advisedly to be used with other strategies like BRB and MSB strategies. Also, a healthy R:R (risk to reward ratio) is advised.

Happy trading.

Thanks for reading.

Cc:
@cryptokraze

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@successgr.with ·
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@jehoshua-shey ·
Thank you so much for your support.
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@cryptokraze ·
<div class="text-justify">

Dear @jehoshua-shey

Thank you for participating in Steemit Crypto Academy Season 03 and making efforts to complete the homework task. You got **9.5/10** Grade Points according to the following Scale;

Criteria | Grade Points
--- | --- 
Presentation Style | 2/2
Content Quality & Originality | 2/2
Understanding of Strategy | 3.5/4
Practical Approach | 2/2

<center>![Crypto_Academy_3.png](https://cdn.steemitimages.com/DQmNU8QfpfkEyoDPfnhD24JJAZ1sG9VQyqa4bGxAtA6kUWY/Crypto_Academy_3.png)</center>
**Key Notes:** 

* Your homework presentation style is very good and I would suggest you to keep following it. 
* In question no 03, while explaining the Trade criteria for Buy orders, your 1st order marking is bit early. We need price above both EMA while in this order case, price is just crossing the EMA and it is a doggy setup because price can just snap back easily and goes in consolidation. Your sell orders markings are spot on.
* In the last question, I wanted to see if students picked this strategy. You have placed the trades which I wanted to see in the task.
<center>![Crypto_Academy_3.png](https://cdn.steemitimages.com/DQmNU8QfpfkEyoDPfnhD24JJAZ1sG9VQyqa4bGxAtA6kUWY/Crypto_Academy_3.png)</center>

We appreciate your efforts in Crypto academy and look forward for your next homework tasks.</div>

Regards
@cryptokraze
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