Table of Contents
- What is RSI?
- How to Calculate RSI for a Crypto Asset?
- How to Interpret RSI Data?
- RSI vs MACD
- What is RSI Divergence?
- Failure Swings
- How to Interpret RSI
- Is There a Bad RSI Value?
- How to Use RSI in Crypto Trading?
- How to Use RSI to Anticipate Market Movements?
- Frequently Asked Questions (FAQ)
What is RSI?
The Relative Strength Index (RSI) is one of the most popular technical indicators in crypto trading. It measures momentum, price movement speed, and identifies overbought or oversold conditions. Developed by J. Welles Wilder Jr. in 1978, the RSI oscillates between 0 and 100:
- Below 30: Oversold (potential buying opportunity).
- Above 70: Overbought (potential selling opportunity).
- 50: Neutral zone (no clear trend).
👉 Master crypto trading with RSI
Key Features:
- Default setting: 14-period RSI.
Formula:
RSI = 100 – [100/(1 + RS)] RS = Average Gain / Average Loss- Used alongside other indicators (e.g., MACD) for higher accuracy.
RSI vs MACD
| Indicator | Measures | Best For |
|---|---|---|
| RSI | Momentum, overbought/oversold | Reversal signals |
| MACD | Trend strength, EMA convergence/divergence | Trend confirmation |
👉 Combine RSI and MACD for better signals
What is RSI Divergence?
Divergence occurs when price and RSI move in opposite directions:
- Bearish Divergence: Price makes higher highs, RSI makes lower highs (potential downtrend).
- Bullish Divergence: Price makes lower lows, RSI makes higher lows (potential uptrend).
Failure Swings
- Top Failure Swing: RSI fails to surpass previous high → Sell signal.
- Bottom Failure Swing: RSI fails to drop below previous low → Buy signal.
How to Use RSI in Crypto Trading?
- Activate RSI on your trading platform (e.g., TradingView).
Identify Trends:
- RSI > 50: Uptrend (look for long positions).
- RSI < 50: Downtrend (look for short positions).
- Spot Divergences to anticipate reversals.
Avoid trading when:
- RSI < 40 (panic selling).
- RSI > 70 (FOMO buying).
Frequently Asked Questions (FAQ)
What is a Good RSI Value?
- Long positions: RSI 20–30 (oversold).
- Short positions: RSI 70–80 (overbought).
Is RSI a Good Buying Indicator?
Yes, when RSI ≤ 30, it signals an oversold market, potentially a good entry point.
Best Indicators to Pair with RSI?
- EMA 5 and EMA 10 confirm RSI signals.
- MACD for trend validation.
How to Interpret RSI 14?
Default 14-period setting calculates momentum over the last 14 candles (adjustable).
Disclaimer: This content is for educational purposes only. Crypto trading carries risks; always conduct your own research.
👉 Start trading with confidence