Technical
Padtai - RRG playbook
TLDR;
Consider buying when the asset shifts from Lagging to Improving, or from Improving to Leading.
Consider monitoring the price closely or selling when it shifts from Leading to Weakening, or from Weakening to Lagging.
In the image, you’re looking at the Momentum Graph, also known as the Relative Rotation Graph (RRG). Before diving into the details, you can customize your view by selecting which coins you want to track or choosing your desired time frame.
Now, let’s break it down in more detail:
⚙️ What is RRG? and how to use it
RRG consists of four quadrants, each representing different stages of an asset’s performance cycle. These quadrants provide insights into the market leadership rotation. Tracking an asset’s movement through these quadrants helps spot trends and potential reversals, giving traders a strategic advantage in both short- and long-term trading.
X-axis represents Relative Strength, and the Y-axis represents Momentum.
The four quadrants are as follows:
Leading: The top-right quadrant. Assets here are outperforming the benchmark and showing positive momentum. This indicates strong and improving performance.
Weakening: The bottom-right quadrant. Here, assets still outperform the benchmark, but their momentum is weakening. It suggests that while they remain strong, they might lose their edge.
Lagging: The bottom-left quadrant. Assets in this area are underperforming the benchmark and have negative momentum, signaling weakness.
Improving: The top-left quadrant. This contains assets that are underperforming the benchmark but showing increasing momentum, indicating potential for a turnaround.
A security moving from the Improving quadrant into the Leading quadrant presents an opportunity. This shift suggests that the asset is beginning to outperform the benchmark with growing momentum. On the flip side, a shift from Weakening to Lagging indicates deteriorating performance and can signal a selling opportunity or a warning to avoid new investments.
Additionally, a move from Lagging to Improving shows an asset reversing its underperformance, signaling an early stage of recovery—a potential buying opportunity for contrarian investors. Lastly, securities shifting from Leading to Weakening are still outperforming but losing momentum, which could be a sign to take profits or watch closely for further signs of weakness.
However, while RRG is powerful on its own, it may not always be perfectly accurate. Combining it with other tools such as Candlestick Patterns, Volume Analysis, RSI, or others can significantly enhance its accuracy.
📊 Example
Example 1: BNB moves from Weakening to Lagging, we can consider selling.
Example 2: SOL moves from Improving to Leading, this could be a buying opportunity.
Use the RRG method across multiple timeframes — 1H, 4H, or 1D — depending on your strategy. By using the Tag button, you can customize the sectors you're interested in.
Whether your interest lies in AI, DEX, DeFi, Meme, Layer 1, Layer 2, or any other sector, filters can be applied to focus on the specific narrative of your choice.
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