Relative Strength Index (RSI) – what is it?

RSI or the Relative Strength Index indicator is one of the most fundamental indicators in technical analysis. Its essence lies in its ability to predict future activity based on a combination of information about previous trends. The indicator helps forecast market structure and potential price fluctuations in the future on specific timeframes.

By its nature, the indicator is an oscillator, in other words, a fluctuating indicator. The oscillator captures price movements and the speed of those movements. Simply put, RSI shows whether the price of a chosen cryptocurrency is in a strong or weak state. The indication is based on closing prices over a specific period, which positively affects the analysis efficiency.

Main indicators and criteria for using RSI:

RSI value close to zero - downward price movement slows down;
RSI value close to one hundred - upward price movement weakens more;
RSI>70 - overbought instrument;
RSI<30 - oversold;
RSI=50 - middle or absence of a trend.

In addition, the oscillator helps identify a trend reversal in price movement. If the price is rising while RSI is falling - bearish divergence. If the price is falling while the oscillator is rising - bullish divergence.

For more information on trading with RSI, you can read this lesson in the free Crypto[START] course: 👉this lesson.