Technical Indicators: My Top 3 Favorites

Technical Indicators: here's a Top 3 of the ones I use regularly in my market analysis.

Indicators feel like a “magic” tool when you're starting out…

When you first get into the world of trading, you swear by them. That said, from my own personal experience, the further you go, the less you use them, because reading the market becomes intuitive!

the more I've advanced in my journey as a trader, the more I've cut back on using them.

Before you get there, though, you do need to use them regularly. So today, I'm going over the 3 indicators I use the most with you!

The golden rule when it comes to technical indicators: taken on its own, a single indicator is worthless!

None of them will make you rich … It's the confluence of multiple complementary technical indicators that lets you define clear, precise buy and sell signals.

RSI: My No. 3 Technical Indicator for Crypto Trading

I like to watch the RSI to spot divergences.

They're sometimes meaningful, but they can also lead to misreadings.

In a range, the RSI works fine, but during a clear uptrend or downtrend, this indicator is far less effective!

RSI: Explained With an Example

During the 2021 bull run, the RSI printed divergence after divergence; yet the price just kept exploding higher.

The RSI is a bounded, momentum-type indicator. It defines 3 main zones:

1. Buy
2. Sell
3. Neutral.

A divergence signals a contradiction between price and the oscillator. This kind of situation is exactly what interests me, what I'm looking for when I watch the RSI.

Price far outweighs this indicator. That's why it has to be handled with real care: CAUTION, PLEASE!
While I'm at it, let me repeat that a single indicator on its own is worthless!

In my view, the problem with indicators is that they heavily influence our decisions, when the core of our job as traders is watching price. To be clear, I'm not calling into question the approach of those who lean on plenty of first- and second-degree indicators to make their decisions. I'm simply pointing out that, according to the method I've built over the past several years, Price Action turns out to be essential!

By the way, this is only an introduction. If you'd like a complete, free RSI course, just follow the link. I also offer a free course on YouTube so you can move on to practice.

RSI: My Full Tutorial on YouTube

CHOP: My No. 2 Technical Indicator for Crypto Trading

Right now, the 2nd technical indicator I favor is the Choppiness Index.

It's a movement indicator that, in a way, helps us define the “shape” of the market.

There are 3 states you can spot when you look at the Chop:

1. Exhausted price trend: Chop discharged
2. Price consolidation: significant swings in the Chop
3. Price is ready to break out of its consolidation: Chop loaded

I'm especially fond of this indicator because it regularly warns me of strong moves to come. It's most effective on the D1 (Daily) and H4 timeframes.

Be careful, though: the Chop is a “strength” indicator, so it gives me no clue about the direction of the coming move! Just like with the RSI, I offer a complete theoretical course to master the Chop Index. To check it out, just follow the link above. Once you're ready, you can maybe move on to practice with my free course on YouTube, available below.

Choppiness Index: My YouTube Tutorial on This Technical Indicator

Open Interest & Premiums: My No. 1 Technical Indicator

To this day, my favorite indicator is watching Open Interest and premiums on futures contracts together.

In the current market, Open Interest is fairly hard to interpret, and the information it provides can be confusing depending on the exchange. In a market with a clear trend, it becomes entirely relevant.
As with every indicator, nothing is perfect, but with a thorough study of this tool, you can unearth some great opportunities. Like any wild animal, you have to learn to tame it to make the most of it.

Coinalyze lets you analyze Open Interest for free on Futures. Meanwhile, Basedmoney, formerly Coinoptionstrack lets you monitor Open Interest on Options.

Open Interest & Premiums | My YouTube Tutorial

Technical Indicators: Any Conclusion?!

To wrap up, I'd say there's no such thing as a magic indicator!

Don't forget to focus on what matters most: PRICE

In my view, price analysis comes first and foremost, because price alone gives us the extra cues we need to enter and exit positions.

Many people think you can't profit from the market in a recession — that's false!

It's even absurd to think that the finance industry just gives up on profits during a recession or a slowdown.

In fact, you should know that at Captain Trading, we're exposed to the market every single day and we keep on turning a profit!

!!! One Last Thing !!!

If you're planning to get started, I recommend OKX, our partner platform, and for several reasons:

1. A regulated, reliable, and well-established platform with deep liquidity on the main markets
2. Access to leveraged trading (futures) in a secure framework
3. Competitive trading fees that drop as your volume grows
4. An environment well suited to learning and progressing with peace of mind
5. A solid, long-lasting platform you can rely on over time

WARNING: If I recommend certain exchanges, it's only because I use them regularly in my own trading, for very specific reasons!

WARNING²: I don't recommend that anyone store their crypto on an exchange, whether it's a DEX or a CEX; you're never safe from a hack or from ill-intentioned managers, no matter how good the exchange in question is.

WARNING² again: You remain solely responsible for your crypto, so stay vigilant and don't hesitate to set up a rigorous security process that involves withdrawing all your crypto from exchanges once your positions are closed.