Trade Bitcoin Trading

RSI Strategy

RSI Strategy

RSI or RSI is one of the most liked indicator used in bitcoin trading. It's an oscillator trading that oscillates between 0 -100. This a bitcoin trend following indicator. It indicates the strength of the btcusd crypto trend, values/readings above 50 indicate a bullish bitcoin trend while values below 50 indicate bearish Bitcoin trend.

RSI Bitcoin Indicator Measures Momentum of a Bitcoin Trend.

RSI centerline sits at 50 for crypto. Crossing it signals a switch from bull to bear bitcoin trend, or back.

When the RSI indicator is above 50, it indicates that buyers have a stronger momentum compared to sellers, leading to an upward trend in bitcoin price on the chart as long as the RSI remains above this level.

Below 50, the sellers have greater momentum than the buyers and bitcoin price on the trading chart will keep going downwards as long as RSI cryptocurrency indicator stays below 50.

How to Trade Bitcoin Chart With RSI Bitcoin RSI Analysis - RSI 50 Center Line Crossover BTCUSD Strategies

RSI Crypto Indicator - How to Trade Bitcoin with RSI Technical Indicator

In the example of trading shown above, the price of bitcoin kept going down when the indicator was under 50. The bitcoin price kept falling while the RSI stayed below 50. When the RSI cryptocurrency indicator went above 50, it meant that the power had changed from selling to buying, and the bitcoin trend going down had stopped.

When the bitcoin price started its upward movement, coinciding with the RSI cryptocurrency indicator crossing above 50, the bitcoin trend shifted from bearish to bullish. The bitcoin chart price subsequently continued its ascent, with the RSI maintaining a position above 50.

From the trading illustration displayed above, when the bitcoin trend was bullish sometimes the RSI would turn downwards but it would not go below 50, this shows that these temporary moves are just retracements because during all these time the bitcoin price trend was generally upwards. As long as RSI doesn't move to below 50 the current bitcoin trend remains intact. This is the reason the 50 center-line mark is used to demarcate the signal between bullish and bearish bitcoin signals.

The RSI cryptocurrency technical indicator uses 14 day period as the default period, this is the period recommended by J Welles Wilders when he introduced the indicator. Other oftenly used periods used by Bitcoin traders are the 9 & 25 day moving average.

The selection for the RSI period is contingent upon the specific crypto chart timeframe being used for trading. For instance, if utilizing a daily timeframe, a setting of 14 periods corresponds to 14 days, whereas on an H1 crypto chart, the 14-period setting reflects 14 hours. For instructional purposes here, we will default to a 14-day moving average, but for personalized trading, you are encouraged to substitute the fixed period with the timeframe relevant to your current Bitcoin trading activity.

To Calculate RSI Indicator:

  • The number of days that a cryptocurrency market is up is compared to the number of days that the btcusd trading market is down in a given period of time.
  • The numerator in the basic formula is an average of all the bitcoin trading sessions that finished with an upward bitcoin price change.
  • The denominator is an average of all the downward bitcoin trading sessions closes for that period.
  • The average for the downwards days is calculated as absolute numbers.
  • The Initial RSI is then turned in to an oscillator indicator.

Sometimes very big price increases or decreases in bitcoin during one bitcoin trading session can change the RSI average calculation and cause a wrong signal - a fake-out signal - that looks like a spike.

RSI Centerline: The center-line for this technical indicator is 50. A value above 50 implies that the bitcoin trading market bitcoin trend is in a bullish phase as average gains are greater and higher than the average losses. Values below 50 indicate a bearish phase in the btcusd market prices are in general closing lower than where it's that they opened.

Overbought & Over-sold Levels: Wilder set the RSI overbought and oversold levels at which the btcusd market heads are overextended at 70 & 30.

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