Relative Strength Index (RSI): Your Crypto Momentum Meter ⚡️ #TradeSmart

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One of my go-to tools for gauging momentum and potential reversals is the Relative Strength Index (RSI).

How does it work?

It's a momentum oscillator that measures the speed and change of price movements. It oscillates between 0 and 100.

Why is it Crypto Gold? ✨

👉 Overbought/Oversold Signals:

🔴 RSI above 70: Often indicates an asset is "overbought" and could be due for a pullback. 📉

🔴 RSI below 30: Suggests an asset is "oversold" and might be ripe for a bounce. 📈

👉 Divergence is Key:

🔴 Bullish Divergence: Price makes a lower low, but RSI makes a higher low. This can signal a hidden strength and potential reversal upwards. 🚀

🔴 Bearish Divergence: Price makes a higher high, but RSI makes a lower high. This can warn of weakening momentum and a potential reversal downwards. 💥

👉 Trend Confirmation:

🔴 During strong uptrends, RSI often stays above 50.

🔴 During strong downtrends, RSI often stays below 50.

My Simple Strategy 📈

I look for these setups:

👉 RSI Overbought/Oversold Reversals: When RSI crosses back below 70 (after being above it) or above 30 (after being below it), it often signals a potential entry or exit.

👉 Divergence Plays: My absolute favorite! I actively seek out bullish and bearish divergences as they often provide early warnings of trend changes before they become obvious.

👉 Confirmation with Price Action: I never use RSI alone. I combine it with price action and other indicators to confirm my biases. For instance, an RSI oversold signal coupled with a strong bullish engulfing candle on the chart is a powerful combo! 💪

Now that you're armed with this knowledge, stop reading and start trading! Just remember to practice with small amounts while you learn. Try it with 1 USDT on your favorite coin!