Mar 27, · RSI is a powerful indicator and can be used to trade profitably. But you’ll have to ditch the mainstream overbought/oversold concept and think a bit out of the box. I have a few more backtests that I’ll be sharing publicly. I will probably publish one of these posts a week. Feb 17, · The RSI is calculated by calculating the momentum of the ratio of higher closes to lower closes - so the more the stock moves up - the more positive the RSI. Example Chart and Analysis If you look at the Bitcoin price chart above you can see the 14 day RSI and two periods over the full 3 month time period that the chart shows. Relative Strength Index (RSI) is a technical indicator that measures the speed and change of price movements to find reversals. Is RSI good for use in trading Bitcoin and cryptocurrency? Watch the video to find out and read more detail in the article below. What is Relative Strength Index (RSI)?
Bitcoin trading rsiBitcoin RSI for COINBASE:BTCUSD by Crypto38 — TradingView
Therefore, any impulsive move that follows is going to act as an outlier and throw the indicator to one extreme. As you can imagine, this could be the breakout that leads to continuation. You would not want to look at this as an oversold or overbought reading that is worth fading.
Like a moving average , the RSI is best applied in its most suitable trading environment. For moving averages these are trends, while in the case of the RSI, it is often best used in ranges where a drop-off in momentum at the extremes is one of the telltale signs of expected reversals. Applying the RSI in a strong trending environment is one of the easiest ways to end up acting on false signals.
It is quite common for traders to spot divergences in the RSI in a trending market. These are always going to read as a divergence in momentum. How to use Volume to Improve Your Trading?
Check out Trading Volume in Ranges and Trends. If the RSI is trading over the 50 line, this is when we should look for confirmation in price action that the trend is strong and possibly look for longs. If price is trading below, we will look for confirmation that the trend is weak and look for short opportunities.
Often, we see that in a downward or an upward trend the line will act as a loose support or resistance zone and that once reclaimed will be an indication that context has changed regarding momentum.
Either it can pick up again for the first time, or suddenly it is now unable to regain steam. As we stated above, we need to be careful with this form of application. Often, in hindsight, it seems like a sure thing, but it is usually something that is cherry-picked to look better than it is. In the case of a bearish trend , a bullish divergence is when price makes a lower low but the RSI makes a higher low, or in the case of a bullish trend , a bearish divergence is when price makes a higher high but the RSI makes a lower high.
The problem with using it for divergences is acting on it prematurely. We write in-depth trading guides, valuable exchange reviews, and share priceless trading tips from top crypto traders. But could our intuition be lying to us? Time to run some actual backtests. Scope: RSI periods of 14 and 2. H4, H1, and m30 timeframes. Only Bitcoin. Fees not included.
Strategy: Long when oversold, exit at RSI exit level. This website is only provided for your general information and is not intended to be relied upon by you in making any investment decisions. You should always combine multiple sources of information and analysis before making an investment and seek independent expert financial advice. Where we list or describe different products and services, we try to give you the information you need to help you compare them and choose the right product or service for you.
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