Welcome to the 5 Min Challenge - RSI, Trends & FIB Tool - Part 1
After the August 2021 Challenge - Part 1 predictions were submitted, it was clear to me that everyone should have the opportunity to sharpen their knowledge from the questions that were asked in the challenge.
As you take this knowledge quiz, your goal is to reach a 100% score at least 3 times in a row.
Once you have done that, you can consider yourself "knowledgeable" enough on these items that they become second nature to you without having to think much about them when making trading decisions.
Have fun and much success... 🙂
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1.
In the pic below, which MA line is showing as current resistance?
Moving average lines (also known as MA lines) are a part of chart TA because it helps to identify where price action is getting its support and resistance zones created for markets to be able to establish a short term direction.
The charts that I provide to you with links have a total of 4 MA lines that appear:
- 10 MA (Green)
- 50 MA (Teal)
- 100 MA (Blue)
- 200 MA (Purple)
Key note: Always remember that "support" means where price candlesticks are "above" the line and "resistance" is where candlesticks are "below" the line.
**Click the image for a larger view**
HintThe colored line that is just "above" the last candlestick seen
2.
In the pic below, RSI is in what buy zone?
RSI (Relative Strength Index) levels have always been the main focus for when to buy a coin. In this pic, the RSI level is at 41.
As you have seen in your RSI training links page, I have a
RSI Levels Chart that has buy zones identified for you. Using that sheet alone will help you to answer this question.
**Click the image for a larger view** HintThe colored line that is just "above" the last candlestick seen
3.
In the pic below, what is the (straight) yellow line considered to be?
When we need to understand market trends, there are only 3 types of trends we ever need to know. Uptrend, downtrend and sideways trend.
- An "uptrend" is when a market price candlestick direction has the bottoms of the candlesticks going higher than the previous candlesticks.
- A "downtrend" is when a market price candlestick direction has the tops of the candlesticks going lower than the previous candlesticks.
- A "sideways trend" is when there is now significant change in direction of the tops or bottoms of candlesticks during a period of time.
**Click the image for a larger view**
HintCandlestick tops are going lower
4.
In the pic below, will the RSI signal line break the yellow trend line to the upside before Aug 26?
When the RSI level is at or near its lower points (30 level) or the higher points (7o level), the trend lines that are in progress on the RSI chart "will be" broken to the opposite direction assuredly.Â
The reason for this is because the strength in the market must "always" work back toward the "middle" or "equilibrium" zone around the 45-55 levels at some point. Also, markets do not have RSI survive below the 30 level for more than 24 hours (1 day) on most markets with any volume.
With that said, the yellow trend line shown on the chart pic below is touching the 30 RSI level around Aug 26 according to the date and time line at the bottom of the chart itself.
At some point, there is a very high probability that this line is broken to the upside.
**Click the image for a larger view** HintThe RSI downtrend is at near its end
5.
In the pic below, what is the name of the colored grid?
In chart TA, we use a tool called the Fibonacci retracement too (also known as the FIB tool). If properly used, this tool allows us to predict certain price levels long before the market arrives at those levels.
There are many theories that can be used with this tool. The main theory that I have been making mostly all of my price predictions on is based on the .618 and .786 FIB levels after a market price peak or bottom has been confirmed.
In the pic below, I have drawn the FIB tool on the right side of the price chart for you to identify the different FIB levels based on the grid lines that represent the market prices that would be suggested at those levels.
**Click the image for a larger view**
HintIt's in the description info, please read it again 🙂
6.
What is the FIB level markets usually retest first after a top or bottom has been reached?
As mentioned in question #5 above, the FIB tool is used primarily to "predict" future price levels on the market based on "past activity" in the candlesticks. Using the pic below, I have prepared a FIB grid for you to see each of these levels representing a price level associated with it.
Things that you need to know to help you with your price selection are as follows:
- When markets "retest" a previous price level, top or bottom, it usually will go to between the .50, .618 or .786 FIB level before reversing again
- Usually the first level retested after a top or bottom price has been identified is the .786 FIB level
- Sometimes, the market price will go a bit beyond the actual FIB levels also, keep that in mind at all times
- In addition, sometimes the market "will not" go as far as the .786 FIB level and will only go as far as the .618 or .50 FIB levels in certain market conditions
HintRead point #2 in this question description
