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What Is RSI and How Do You Apply It to Crypto Trading?

btc rsi

The RSI indicator is a powerful tool that has withstood the test of time. In this scenario the RSI BNB moved down as Bitcoin jumped from $16,000 to $20,000. MACD is an indicator that consists of two exponential moving averages (26-period EMA and 12-period EMA) and a histogram. Divergences between price and oscillator movement are utilized to identify whether the market is bullish or bearish. Two common terms in the crypto industry are overbought and oversold. Overbought is whenever a cryptocurrency is trading at a level above its value so a correction is expected.

Bitcoin BTC Price, Ether ETH Price Trade Marginally Lower … – CoinDesk

Bitcoin BTC Price, Ether ETH Price Trade Marginally Lower ….

Posted: Fri, 03 Mar 2023 17:44:00 GMT [source]

And below, we will consider the most basic and widespread of them. The RSI is only showing you what it thinks might happen to crypto or an asset based on how it performed in the past. While the RSI can take away some of the burdens of decision-making, you should always use it with consideration and do your own research before making a big move.

Limitations of the RSI

Your stop can then be placed below the previous low since your analysis is based on the fact that there will be no new low. If there is a new low, then the analysis is proven to be wrong and your stop loss will be hit. The moving average convergence divergence is a similar popular indicator.

Welles Wilder invented it in his groundbreaking book New Concepts in Technical Trading Systems, published in 1978. Crypto price prediction is exceedingly difficult as a myriad of factors impact asset values on a continuous basis. Rumours, hacking, and government regulation can quickly sway values. RSI Convergence is when the price makes a lower high or a lower low, and the oscillator makes a higher high or a higher low in the meantime. RSI Divergence is when the price makes a higher high or a higher low, and the oscillator makes a lower high or a lower low in the meantime.

What is a good RSI indicator?

Key Crypto Infrastructure The Ethereum Virtual Machine helps developers build DeFi applications, scale web3, and launch NFT projects on the Ethereum Blockchain. In this chapter, we will talk about the subtleties of the technical part of the RSI indicator. These numbers are used to indicate the likelihood of a change in the price movement. Once done you can select your time period at the bottom bar.

Another way to trade this pattern would be to wait for the price to bounce off the bottom support for a better risk-reward entry. ETHUSD / 4H Hello traders, welcome back to another market breakdown. ETH has been trading in a down trend, the price is rejecting a key level where bears are expected to show up.

Seeing these high and lows is the key to identify divergence or convergence. Technical analysis is exactly this, looking for indications that the price will change, and you make a calculated bet on the expected change. However, it’s not an exact science, and you should know that these indications can always turn out to be false. It might be even easier to understand it when explained in another way. Imagine on a physical market someone is selling apples, and the salesman is raising the price. But the higher the price goes, the fewer people are willing to buy.


At crypto rsi, our priority is to provide high quality information. We take our time to identify, research and create educative content that is useful to our readers. Ethereum is about to complete an Inverse Head and Shoulders (IH&S) pattern with the Support of the 1D MA50 (blue trend-line). Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now. Don’t wait for the RSI to reach 0 or it almost never happens.

Understanding the RSI indicator: how to read RSI?

Depending on the cryptocurrency, levels such as 20 and 80 can be more useful. Looking at the RSI compared to price over longer timeframes will help give you an idea of the right levels to use. This is important because market strength is usually the main indicator of how far the market trend can go or whether a market reversal occurs. Oscillator RSI, as noted earlier, fluctuates in a certain corridor between the maximum and minimum values. LTC It works on the speed of price changes, displaying the results in the above range.

When averaging positive and negative price movements, exponential smoothing is used. The Relative Strength Index or RSI is one of the most common indicators in Technical Analysis, or TA for short. In traditional stocks and cryptocurrencies like Bitcoin and Ethereum, TA utilizes existing data to make more informed decisions on when to buy and sell for traders. From traditional to cryptocurrency markets, most traders rely on specialized tools to perform these analyses, and the RSI is one of them.

Things To Watch For When Trading Crypto With The RSI

A typical where the price goes “sideways” or simply ranges. This is the perfect moment to interpret RSI overbought and oversold signals as buy and sell signals. RSI and MACD complement each other very well, so traders often use these indicators together. A combination of RSI and MACD gives a more precise picture letting traders decide whether to buy or sell and predict the asset’s momentum correctly. However, sometimes indicators can give different signals simultaneously. In such cases, traders should decide which one they trust better.

Keep in mind that divergences usually happen at the end of a trend (bullish or bearish.) That’s why we have price lines to indicate when a coin is Overbought or Oversold. Sometimes, the price doesn’t plummet or skyrocket right away but a while after passing price lines. We can avoid some of these gaps by adjusting the price line levels.

What is RSI in crypto?

The Relative Strength Index (RSI) predicts price movements of an asset within a specified period of time. It's an excellent tool when you want to have a firmer grasp on what your asset will do and make decisions accordingly. In this case, the RSI can also predict price changes of cryptocurrencies.

The MACD, like RSI, is a momentum-following indicator that displays the balance between the moving averages of Bitcoin or another crypto. The rules of potential signals from this indicator’s exponential moving averages are the same as for regular moving averages. When RSI enters overbought or oversold levels it signifies a potential market reversal and can thus provide a trader with good buy or sell points.

EMAn – the average price decrease for the period n, smoothed exponentially. Trading and investing in cryptocurrencies can be challenging at times without proper analysis and smart… You can adjust the appearance of the RSI to your liking, but make sure to keep price lines between 30 and 70 like above. This setting can be changed later as you become more experienced with how everything works. You do not have to worry about calculating the RSI value of any crypto yourself; the indicator on exchange platforms does all the calculations for you. The momentum oscillator, a line graph oscillating between two extremes, reads anywhere from 0 to 100.

The RSI is measured based on the change of an asset’s price between 14 periods, which can either be on a daily or hourly chart basis. To calculate the RSI, the average gain of an asset within the period and its average loss is divided and plotted on the zero to 100 scale. Cryptocurrency traders are looking for these indicators to determine if the buying or selling pressure has reached a breaking point.

Ethereum — the world’s second-most famous blockchain network — is a platform for creating decentralized applications based on blockchain and smart contract technology . It’s the chain that birthed DeFi and started the NFT craze which saw billions of dollars pour into cryptocurrency. If the support is retained, the asset will continue to grow. The RSI can help identify when the asset will cool off, if for just a brief period.


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