RSI Indicator Explained — How to Use the Relative Strength Index
The Relative Strength Index (RSI) is a momentum oscillator that measures how fast and how much a crypto price has moved. It is one of the most popular indicators for spotting overbought and oversold conditions.
What RSI measures
RSI compares average gains against average losses over a period — usually 14 candles. The result is plotted as a line between 0 and 100.
- RSI above 70 — the asset is considered overbought; the move may be exhausted.
- RSI below 30 — the asset is considered oversold; a bounce may be due.
- RSI around 50 — neutral, a trend continuation zone.
How traders use RSI in crypto
- Reversals: wait for RSI to leave the extreme zone (cross back below 70 or above 30) before entering.
- Divergence: if price makes a higher high but RSI makes a lower high, momentum is fading — a classic reversal signal.
- Trend confirmation: RSI holding above 50 in an uptrend signals strength.
Common RSI mistakes
- Blindly selling at 70 or buying at 30 — in a strong trend RSI can stay extreme for a long time.
- Using RSI alone — combine it with structure (support/resistance) or another indicator like MACD.
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