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Fade (counter move)

mean reversion, exhaustion

A trade against an overstretched move: the price has run too far, too fast and shows the first signs of exhaustion. Trading against the trend is riskier than trading with it.

In the screenerShort-term horizon only, and only when three things line up: RSI at an extreme, price outside the Bollinger band, and momentum already turning (MACD histogram). Starting score 3; volume and a matching RSI divergence can raise it, a very strong trend (ADX ≥ 35) costs a point. Tight stop, 5 trading days max.

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All terms in the options glossary → · Methodology →