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The Relative Strength Index – RSI is a momentum indicator that measures the magnitude of recent price changes to analyze overbought or oversold conditions. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.

You do have to worry about certain things, what is overbought? What is oversold? Also got to consider, why do you have to worry about them?

The RSI is, in my opinion, one of the best indicators you can use. First and foremost it can determine if you are buying in the correct area. You never want to buy into a coin that is going down and keeps going down, same for buying a coin that has had huge growth and is about to come down.

You also have different zones, Bullish, Neutral and Bearish. These are also important to determine the behavior of the coin.

Then you have divergence, the bullish ones (uptrend) and the bearish ones (downtrend) more importantly what do they mean?

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How can these paint a picture before price action, which is often the case in some situations; the RSI will tell you when the strength is exiting before the price shows that information.

The video below shows you some examples of the Relative Strength Index in action. It is in-depth and we break it down step by step for you.

After watching this you will have a better understanding of the RSI and how to use it before jumping into a trade.

Try practicing with a coin you know, first find the chart and then go back in time and find things for yourself, then do it live to see if you can plot them. It makes a huge difference using this indicator and it is very powerful when you mix it with other indicators when you got that confluence.

 

That’s all for this article – Relative Strength Index (RSI) – How To Read.

You can find more trading tips on our Technical analysis page and be sure to check out some of our crypto coin reviews.

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