Rotation

#Narratives #Rotation #Relativestrengthindex #onchaindata #cryptotrading
Money follows stories—but the money arrives first. Instead of guessing the next hot sector, use this radar to spot narrative rotations early and position before the crowd.
Why narratives matter
Flows concentrate in clusters (L2s, DeFi fees, AI, RWA, restaking).
Leaders within a narrative move first, then laggards follow with higher beta.
Rotations often outlast a single day—great for swing trades.
Signal 1: Relative strength vs. ETH across a basket
Build 4–8 coin baskets per theme (e.g., L2s: OP, ARB, BASE plays; DeFi: UNI, AAVE, CRV/LQTY; AI: FET/ALI/TAO; RWA: ONDO/MKR).
Rule: If 3+ names in a basket print higher‑lows on the daily and outperform ETH for two sessions, flag the theme.
Action: Long the strongest leader first; only add a laggard after it reclaims last week’s high.
Signal 2: On‑chain usage upticks
For chains: Rising active addresses and DEX volumes 7‑day over 7‑day.
For DeFi: Protocol revenue/fees rising with users (not just TVL).
Rule: Price without usage = fade risk; usage with price = fuel.
Signal 3: Funding and open interest alignment
Healthy start: Funding near neutral while price pushes up and OI climbs slowly—spot-led.
Caution: Funding spikes positive before price breaks—a sign of crowded longs; wait for retest/confirmation.
The playbook
Pick the leader, not the story
Trade the clearest chart in the basket—clean reclaim of last week’s high, strong RS vs. ETH, rising volume.
Avoid “cheap” laggards until the leader makes a second leg.
Entry triggers
Break-and-hold: Close → Retest → Hold above last week’s high on 1h/4h.
Pullback buy: First higher‑low above the reclaimed level with shrinking funding.
Position sizing and risk
Risk per trade ≤0.25% of equity; max 1%/day.
Stop below the retest low or last 4h higher‑low. If distance too wide, reduce size or pass.
Add-on and exit rules
One add after a successful retest and new higher‑low forms.
Trim 25–30% at prior supply or measured move equal to the last base height.
Exit if the leader loses the reclaimed level on volume or if funding turns extreme against price and momentum stalls.
Rotations to ignore
Narrative pumps with flat usage and spiking funding.
Themes where only one illiquid token is moving.
Charts still below the 50‑day MA unless reclaimed on volume today.
Your 10‑minute weekly workflow
Build and save narrative baskets with alerts on each.
Scan RS vs. ETH and last week’s high reclaims.
Check usage metrics for chains/protocols in the top two baskets.
Draft two trade cards: the leader and one laggard with tight invalidation.
Copy/paste checklist
Theme basket: __
3+ names outperforming ETH 2 days? Y/N
Usage rising (DAA/fees/volume)? Y/N
Funding near neutral with OI up? Y/N
Leader reclaim level: __ | Stop: __ | First target: __
Laggard confirm level: __ | Abort conditions: __
$ARB
$OP