Adverse tactics.
Adverza tactics is a relatively young direction in the field of graphical analysis, and this approach has been making its way since the beginning of 2000.
If you start searching on Google and try to find useful information about strategy, then you will probably come across a number of abstruse words about esotericism and sacred points, as well as all sorts of expressions in this spirit.
It is worth noting that the author’s explanations of the strategy are so abstruse and mystical that after reading a couple of paragraphs, any sane person will close the book.
Perhaps this approach has become a thing of history, and traders have lost interest in it due to incomprehensible and sometimes illogical explanations, and there can’t even be talk of a clear algorithm of actions for a trader.
However, despite the verbal exhaustion of the author of the technique, it is based on only two simple patterns that you may have also observed more than once on the chart.
The tactic itself and its patterns can be found on any type of asset and currency pair. It is also worth noting that Adverza tactics are non-indicator strategies, and to use it you only need a candlestick chart and trend lines.
Adverza tactics can be used on any time frame.
Adverza tactics patterns. Construction
Adverza tactics are based on two patterns, which are called “Expansion” and “Attraction”. To build them, you will need two trend lines as well as 4 extreme points, depending on the direction of the trend.It is worth noting that extrema (local minima and maxima) are determined visually, but if you have difficulty determining them, you can use this wonderful indicator like Zig-Zag.
Expansion Pattern
The “Expansion” pattern is built on the basis of four points, and the construction occurs as the market situation develops.
There are two options for constructing a model, namely for a bullish and bearish market. So, let's look at the general principles of construction, as well as application options.
For an ascending market (the trend is directed upward), we find two sequentially growing local minimums and draw an ascending trend line through them. There should be a maximum point between the two formed minimums.
Thus, our figure will consist of points 1-2-3. Then we wait for the formation of a new maximum, which should be above point 3 and form a new extremum at point 4. We draw a trend line through points 2 and 4 (we connect two local maxima).
Thus, we get two trend lines that are expanding. After the price touches the lower trend line and forms the third minimum (point 5), a buy position is opened with a target to the previously formed local maximum at the level of point 4, the breakthrough of which opens the way to the opposite trend line (point 6) example:
If in a downward market we draw a trend line along two successively decreasing highs, with a local minimum between them, which creates a three-point 1-2-3 figure.
Then we wait for the price to form a new low (point 4). Draw a trend line through points 2 and 4, which should create the appearance of two diverging trend lines (an expanding channel).
After the price pushes off from the fourth point and forms the third local maximum (point 5), we open a sell position with a target to point 4, and then to the opposite trend line (point 6). Example:
Pattern "Attraction"
If the pattern that we discussed above allows you to find clear points to enter the market, then thanks to the “Attraction” pattern you can see the estimated end point of the trend.
The Attraction pattern is quite rare, but it appears in both bull and bear markets.
In order to build an “Attraction” pattern for a downward market, you will need at least 4 points. Initially, draw a trend line through two decreasing extremes. A strong low should form between the two local downward highs, creating a 1-2-3 pattern.
Then we wait for the appearance of a new strong local minimum, which will appear as a result of repulsion from the upper trend line. Connect two downward lows with a trend line.
Ultimately, you will get a kind of triangle, and the point of intersection of the trend lines is the very “Sacred Point according to Adverse”, near which you can expect the end of the trend. Example:
To build the “Attraction” pattern in a bullish market, the conditions are completely opposite, namely, the first line is drawn through two local minimums, while the second through two local maximums.
In conclusion, it is worth noting that Adverza tactics are designed primarily for experienced traders, since you must have experience working with trend lines, channels, as well as lines of support and resistance.
The disadvantage of the tactic is the subjectivity of its application, namely, each trader, depending on his experience, can find and define extreme points on the chart differently.