Momentum

💡 How strong the trend is

💡 Tells you if a reversal is going to occur

💡 Picking out price tops and bottoms

Relative Strength Index (RSI)

(» Show chart «)

Single line scaled from 0 to 100.

> 50 = 📈 probably uptrend

> 70 = overbought = sell

< 50 = 📉 probaby downtrend

< 30 = oversold = buy

⚠️ Beware of fakeouts!

(» Show chart «)

Confirmation when the market is turning.

RSI:overbought
Bollinger Bands: still expanding = no action!
RSI: overbought.
Bollinger bands: started to contract = market is getting quiet.
RSI: overbought
Bollinger bands squeeze together
📉 Both indicators agree to sell! The market is ready to move down.

(» Show chart «)

Find where a trend might be ending and where the market is likely to go.

Determine when an asset is overbought or oversold.

Pick an entry point = get into a trend at the very beginning.

> 80 = overbought = 📉 downtrend likely to follow.

< 20 = oversold = 📈 uptrend likely to follow.

⚠️ Beware of fakeouts!

(» ADX DI+/DI- chart «)

Signal of trend strength

Strength of the trend, NOT the direction

Range from 0 to 100

< 20 = weak trend

> 50 = strong trend

Use ADX to avoid fakeouts.
Best used in combination with other indicators.
Combine with a directional trend indicator (eg. Parabolic SAR).
Confirm that a trend is strong and is going to continue (gives you more confidence).

Settings:

Yellow: shows the strength of the trend.

Green line above the red line: bulls are in control

Red line above the green line: bears are in control

Can help you to exit the trade when the trend weakens = avoid getting caught by price retracements.

⚠️ ADX lags behind the price, so is not useful if you want to get in on trends early.

Includes

Theory behind it: distinction between smart money and retail investors.