The fomo finder combines the funding rate and futures premium (or lack thereof) to identify the markets underlying emotion. Greed / fomo signals are used to signal profit taking opportunities on longs. Panic and capitulation signals are used to take profit on shorts and / or to enter long positions.
Using the fomo finder with emasar
When emasar signals a bull trend, and the fomo finder is balanced (yellow), then the trend is expected to continue. Likewise, when emasar signals a bear trend and the fomo finder is balanced then the trend is also expected to continue.
When emasar signals a bull trend, and the fomo finder signals greed (orange) or fomo (red) then the trend is in danger of stalling or fully reversing. The longer the trend lasted before the greed or fomo signals the more likely it is to reverse. Similarly a bear trend is expected to stall or reverse when the fomo finder signals panic or capitulation.
If there is panic or capitulation during an emasar bull trend then it can provide a great opportunity to buy the dip. If there is greed or fomo during a bear trend then it can provide a great opportunity to sell the bounce.
Using the fomo finder with the exa
Instead of trying to catch a falling knife when the market starts to panic or capitulate it is best to wait for confirmation of a bullish reversal before entering longs or exiting shorts. In this situation one could wait for a higher time frame exa cross below -2, such as the daily or weekly. Likewise one could look for a bearish exa cross above +2 when the market sentiment is greed or fomo.
When the market starts to fomo price will often move much sharper than one can imagine. During the markup period the higher timeframe exa’s are expected to stay bullish and vice versa for periods of panic or capitulation. When the exa finally does crossover at an extreme then it provides strong confirmation of a stalling point or a full reversal.