LEARNING INDICATORS PART-2
The Stoch RSI gives values between 0 and 1, often shown on a scale of 0โ100 (by multiplying by 100).
It has 2 lines:
%K (fast line, usually blue)
%D (slow signal line, usually orange)
๐ Default Settings:
RSI period: 14
Stoch RSI period: 14
%K smoothing: 3
%D smoothing: 3
These can be tweaked, but theyโre most commonly used.
โ How to Read Stoch RSI:
Range Meaning Signal
Above 80 Overbought ๐ฅ Potential Sell Signal (reversal or pullback may come)
Below 20 Oversold ๐ฉ Potential Buy Signal (price may bounce soon)
Crossovers When %K crosses above %D (buy), or below %D (sell) ๐ฏ Entry/exit triggers
๐ Typical Trading Strategy:
๐ข Buy Signal (Bullish Reversal):
Stoch RSI is below 20
%K line crosses above %D line
RSI shows strengthening
Confirm with candle pattern or MACD support
๐ด Sell Signal (Bearish Reversal):
Stoch RSI is above 80
%K line crosses below %D line
RSI weakening
Volume drop or resistance level near
๐ Why Use It in Crypto?
Crypto is volatile โ Stoch RSI reacts fast to price swings.
Helps in short-term trades and scalping.
Can predict reversals earlier than RSI or MACD alone.
Used heavily with support/resistance zones.
โ ๏ธ Tips:
Donโt use Stoch RSI alone โ confirm with volume, price action, MACD, or trendlines.
Avoid signals during sideways/choppy markets โ many false triggers.
Combine with higher time frames for better accuracy.
๐ Visual Example (Textual):
Imagine BTC is falling โ
Stoch RSI goes below 20 โ
%K crosses above %D โ
Price is near support โ
๐ High chance of bounce. You could enter with stop-loss below support.
