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TRADERVISION Trader Talk > Trading The Chop - Buying the Bottoms
When the ADX is declining and or below 30 and especially 20 it means that price is trendless and therefore mostly overlapping, corrective. During these periods oscillation based indicators such as a Stochastic can produce decent trade signals with positive Sto crosses, especially those at or near the 30 levels being Buy signals. [ VRTL DOTD GRN ] These Buy signals can be confirmed by positive price action such as the formation of Triangles and the print of positive candlesticks, such as Hammers and reversal Dojis and or positive candlestick patterns such as 2 Bar Reversals and Bullish Engulfing. Buy signals will typically occur at or near levels of support such as the tops or bottoms of price gaps [ SHD LGHT BLU ] or at levels of prior support where previous bounces have occurred. [ HOR DOTD GRN ] If the signal occurs while the RSI is above 50 watch for the move to be relatively longer than if the RSI is below 50. If the RSI is above or gains the 50 level a standard trade protocol is to maintain Long as long as the RSI remains above 50 and to close the position at the loss of the RSI 50. A more conservative one is to close out when the Sto makes a negative cross. Typical Long trade targets are resistance levels such as price gap tops and bottoms and levels of prior resistance that should be confirmed by the formation of negative price patterns such as Asc Flags / Wedges, Brdning Tops etc and or negative candlesticks such as Hanging Man, Shooting Star etc. and or negative candlestick patterns like a 2 Bar reversal, Bearish Engulfing etc.