Chart Decoder Series: RSI -The easiest way to discover superb and overlooking markets

May 20th Chart Decoder Series: RSI -The easiest way to discover superb and overlooking markets

Welcome to the chart decoder series. Here, classify the world of technical analysis as a tool to actually use.

In the previous item we dealt with the moving average and MACD and it is a great way to identify trends and exercise. Now see RSIA tool used by many traders to have better confidence in its own deals.

What is RSI?

RSI represents the relative strength index. It helps to check if the coin has been buying or selling too much and to be ready to reverse.

It is marked as a moving line between 0 and 100. Most traders are used with 14 periods. Depending on the period of the chart, it can mean 14 days, 14 hours or 14 minutes.

Unlike the indicators that follow the price, the RSI does not track the location of the price. It tells you How extreme is the recent purchase or sales pressure. This allows you to find out if the market is trying to reverse before the market is actually changing.

How to read:

• 70 or higher RSI = Overhaul → Market can be caused by correction.
• RSI with less than 30 = Radiation → Market may be due to bounce.
• RSI between 40-60 = Neutral → There is no strong signal

Example of action:

RSI (purple panel): Excessive warning

• RSI sits on top 70Signal classic Overpass.
• This suggests that Bitcoin’s recent optimism may be. Losing steam Or approach natural correction.

Trader is seeing:

• RSI falls Less than 70 It can mean that the fullback is starting.
• If the BTC is strongly maintained, the RSI can maintain excess numbers. This is a common behavior in a strong rise, but it is also a dangerous area for late buyers.

For better accuracy, use the RSI with MACD and Movement Averages to make more information based on information.

Macd: Optimistic but slowing exercise?

• MACD line (blue): 4,142
• Signal Line (Orange): 3,536
• Histogram: Positive, but it starts flat and suggests The amount of exercise is slowing.

MACD is comfortably optimistic over orange, but keep an eye on the histogram. It is the first clue that when the bar starts to reduce it, optimistic propulsion disappears.

Movement average: Is the BTC overly expanded?

• 50 days EMA (YELLOW LINE): 92,570
• 200 Days SMA (Blue Line): 91,673

BTC is far beyond these critical moving average, which confirms the intensity of the current upward trend.

But this also raises the flag. Is the market exaggerated?

If the price is too far from this average Healthy correction Often, the price comes back 50 EMAMany traders consider dynamic support in the bull market.

Last takeout: Do I have to act or wait now?

• Current trend: Strong and optimistic but potentially expanded.
• RSI: Pay attention to the excess zone.
• MACD: It is still optimistic but shows early signs of slowing.
• Strategy:
  
  • If you are already gaining profits, this is a good time to consider. Secure profit Or tighten the stop loss.
  • If you are waiting for entering Korea, Fullback for 50 EMA More powerful and lower risk.

Pro tips for using RSI like a pro

RSI is simple, but it is actually important to use well. Here’s how skilled traders make the most of the RSI.

• Understand the market situation
  
  RSI works beautifully Sid or range marketA place where the price bounces between support and resistance. But in a powerful trend (like a bull run), the RSI can maintain or overlook for several weeks. Do not press the sales button because the RSI hit 70. First look at the larger picture.

• Combine with other indicators
  
  RSI works best when it is part of the conversation. Try to pair the following.
  • Macd To see if Momentum agrees with RSI.
  • Movement average (same as 50 EMA) Make sure the price is too far from the main support level.

• Be careful of radiating

  Price is A New bestBut is RSI? That is called WeaknessPromoting can slip.
  Price is A New lowBut is RSI? that is OptimismThe bounce may be on the corner.
  It is one of the clues that the divergence is not always played immediately, but the serious merchant does not ignore it.

• Play with the time zone to improve your strategy
  
  The RSI read value changes depending on the time you see. if Every day RSI shows overrangedhowever 1 hour RSI is coolingThis often means that the market is short -term in the short term within a greater uptrend. Smart traders use it while waiting for the short -term RSI to be reset before returning to a larger trend. This approach helps not to chase the top and offers a low risk. Always check several periods before moving.

Launched soon in the chart decoder series Bollinger bands -How to trade volatility like a pro

Bitfinex. Originally Bitcoin Exchange.