What are trends, support and resistance? This episode of Indodax Academy will cover everything you need to know about Trend, Support and Resistance.
What are trends, support and resistance?
In general, we know that the trend is something that has been hit lately. The trend that we generally know is something that is loved by many people. But the trend does not only occur in everyday life, in price movements also have a trend. This trend means the direction trend in price movements.
If we look at the chart images, there is always an up and down movement in prices. Even if there is a downward movement, there will still be a tendency for price movements to increase more and more. For example in this picture. If the price movement is getting more and more right, the trend of price movements like this is called UPTREND.
How about this price movement trend? From left to right there prices move up and down, but the more the movement tends to decrease right, now the trend of price movements like this will be referred to as DOWNTREND.
Now, if we find a chart like this, from left to right, prices move up and down, however, the movement is not significant. Getting to the right, the movements don’t go up or down. This price movement trend is referred to as NO TREND or SIDEWAYS
3 trends in price movements, it can be concluded that there are peaks and also price valleys. Movement to the right is increasingly rising. Prices can form peaks and valleys getting higher, this is called Higher High (HH) and Higher Low (HL). Prices for peaks and valleys that are getting to the right as they go down, this is called Lower High (LH) and Lower Low (LL). Prices do not form new peaks or valley prices. He will move in a certain price range or level.
So why is reading trends important?
Trading digital assets is more or less the same as trading principles. We buy at one price level and sell at a higher level. There is a term for this, namely Buy Low Sell High, i.e. buy low sell high. The second term is buy high sell higher or buy high and sell higher.
Now in order to sell at higher prices, we need price movements that are getting to the right the higher or what is referred to as uptrend movements. How to trade that can be done is, buy digital assets when the lowest price, and sell it when prices have reached higher in order to get a profit.
If we choose wrongly, whose movements are declining, then, it will be difficult for us to sell at a higher price. Because downtrends have a tendency to peak prices that are getting lower and lower. The right way to trade to take advantage of a downtrend is that we can sell the digital assets we have, and will buy back when prices are lower. So, we can have more digital assets than before.
Another thing you can do during a downtrend is to buy digital assets at the lowest price. When a trend reversal occurs from downtrend to uptrend, you have the potential to get high profits.
For those of you who find charts whose movements are not significant like this, chances are that they are moving in sideways or no trend. For this, it can be exploited by following the rhythm of ups and downs in prices and trade quickly with the difference between buying and selling to get profit.
At this point, let’s practice reading the chart so you can understand more. So you just open indodax.com, then click the marketplace, here will appear the names of digital assets, then click bitcoin cash, and we click on the advanced chart, then the display will appear like this. Here is a chart of BCH or Bitcoin Cash Market with a time frame every 15 minutes. Which means that each candlestick describes the price movement for 15 minutes. The last candle closes at 5,612,000 rupiah. And the green candle that depicts rising price movements. However, as we observe the peaks and valleys of prices from the left side of the chart to the right, the prices form peaks and valleys that get lower and lower. These are the characteristics of downtrend price movements. So the conclusion is the trend that occurs in the Bitcoin Cash market in a time frame per 15 minutes is a downtrend.
Up to this point, we have learned to read period charts, information from candlesticks and trends. Furthermore, there is support and resistance on the chart that helps us provide information about when is the right time to sell or buy.
In general, support is something that holds weight or keeps it upright. In price movements, support is the bottom pedestal holding down prices. The rest, Resistance is a refusal to accept or attempt to prevent something with action. In price movements, resistance is the upper limit that holds prices up. Resistance is the roof or ceiling of the room. Meanwhile, support is the floor.
So how do I find support and resistance in the graph?
This support and resistance can be sought in various ways, and keep in mind that uptrends, downtrends and sideways are not always like that, every trend has a beginning and an end. I’m sure from this video you have learned about Trend, Support and Resistance
Now in another video I will discuss when and how trends can reverse direction. Curious how to do it? Stay tune in the next episode!