The difference between
MACD and RSI
📌 The fundamental difference in function:
- RSI (Relative Strength Index): Measures price momentum and shows whether the currency is in a state of overbought or oversold.
- MACD (Moving Average Convergence Divergence): Measures the price direction and the strength of that direction based on moving averages.
⚙️ Calculation method:
RSI: Based on comparing the average gains and losses over a period (usually 14 days), with a value between 0 and 100.
MACD: Calculated by subtracting the 26-day moving average from the 12-day moving average, and a third line called "signal line" is added.
🔍 Interpretation:
RSI:
If the value is below 30 ➡️ Oversold ➡️ Likely to bounce upward.
If the value is above 70 ➡️ Overbought ➡️ Likely correction or downward movement.
MACD:
If the MACD line crosses the signal line from below to above ➡️ Bullish signal.
If it crosses from above to below ➡️ Bearish signal.
🎯 What does each indicator tell you?
- RSI: Gives an idea about immediate momentum and buying or selling pressure.
- MACD: Clarifies the overall price direction and confirms the continuation or reversal of the trend.
💡 When to use each indicator?
- Use RSI for short trades and monitoring saturations.
- Use MACD to confirm medium and long-term trends.
- Using them together enhances the accuracy of the analysis.