1. The concept of RSI indicator
RSI (Relative Strength Index) measures how overbought or oversold the market is between 0 and 100.
Generally:
Above 70 → overbought (potential signal for a downward correction).
Below 30 → oversold (potential signal for a bullish rebound).
---
2. Setting up the chart on Binance
1. Open the trading page for ETH/USDT on Binance (Spot or Futures interface).
2. Click on Indicators above the chart.
3. Add the RSI indicator with the default setting (14 periods).
4. Ensure that the RSI line appears below the price chart, with horizontal levels at 30 and 70.
---
3. The practical strategy
1. Searching for signals of saturation
When RSI drops below 30:
• Indicates oversold.
• Wait for a bullish reversal candle to appear (like Hammer or Bullish Engulfing).
• Open a Buy/Long trade at a nearby support level.
When RSI exceeds 70:
• Indicates overbought.
• Look for a bearish reversal candle (like Shooting Star or Bearish Engulfing).
• Open a Sell/Short trade or close part of your long positions.
2. Risk management
Set Stop-Loss at about 1-2% of the entry price below/above the nearest local low/high.
Set Take-Profit with a risk:reward ratio of at least 1:2 (for example, risking 1% to achieve 2%).
---
4. Simplified practical example
Current price: 2,498.67 USDT (24h: 2,486.17–2,537.39).
RSI dropped to 29 → oversold.
We noticed a Bullish Engulfing candle appearing at 2,480 USDT (near technical support).
1. We entered Long at 2,485 USDT.
2. We set the Stop-Loss at 2,440 USDT (~1.8% below).
3. We set the first Take-Profit at 2,535 USDT (~2% above).
4. We set the second Take-Profit at 2,585 USDT (~4% above).
> If the price rises from 2,485 to 2,535 USDT: we took partial profit, and the remaining amount aims for 2,585 USDT.
Will you try using RSI today to trade ETH? Do you prefer changing the indicator period (for example, 7 or 21)? Share your experience or inquiries with us!