How To Trade Against Technical Indicators — And Succeed 🔥
This post introduces a strategy that goes against all odds!
It uses an indicator in an entirely different way—and generates high success rates.
Let’s dive in 👇
1️⃣ Average Directional Index — The Core of the Trade Strategy
Before we dive into the details, we have to understand the most important technical indicator of this crypto trading strategy: the average directional index (ADX).
Fundamentally, the indicator measures the trend strength.
For example, a value above 30 indicates a strong trend.
By assessing the strength, the ADX helps to filter out “wrong” signals and make a strategy more robust.
2️⃣ Trading Against the ADX – A Proven Strategy
But sometimes, it makes sense to go against the ADX. Going against the ADX means to open trades when a price movement doesn’t show strength (ADX <30).
So here’s a proven trade strategy I use that turns the ADX upside down and delivers robust results:
➡️ Search for tokens that have an overbought or oversold RSI value (>70 or <30)
➡️ Additionally, the price should have traded below/above a significant moving average (EMA200, for example) and crossed this line just recently.
➡️ The ADX must be below 30 (the lower, the better!!).
→ If the RSI is overbought, I open a short position; if an oversold RSI is oversold, I open a long position.
So, what’s the idea of this strategy:
It look for pumps not backed by a strong trend (ADX <30).
Accordingly, it assumes there’s a good chance of a quick reversal and (depending on the chart) continuation of the previous trend.
I attach an example of $AVAX
On the daily chart, AVAX enters the overbought territory. Additionally, the price crosses the 200 EMA. At the same time, the ADX remains at 22 (!!).
As a result, we see an immediate reversal.
👇Let me know your thoughts in the comments 🙌
