Understanding RSI: A Simple Guide 📊

The Relative Strength Index (RSI) is like a speedometer for price strength, measuring market momentum on a 0-100 scale.

How RSI Works:

1. Track Price Movement: Analyze green candles (gains) and red candles (losses) to gauge market direction.

2. RSI Calculation: Compares the last 14 days' upward and downward strength.

3. Signal Generation: RSI indicates if the market is overextended in one direction.

Using RSI to Your Advantage:

- Buy Signal: RSI below 30 (oversold zone) may indicate a potential buy zone.

- Sell Signal: RSI above 70 (overbought zone) may indicate a potential sell zone.

- Divergence Strategy: Look for discrepancies between price movement and RSI signals, which can indicate potential reversals.

Real-World Example:

If ETH's price is falling and RSI drops to 22, suggesting extreme sell pressure, you could:

1. Enter a long position at RSI 22.

2. Set a stop-loss below support.

3. Exit the trade at RSI 50-60.

By understanding RSI, you can make more informed trading decisions and potentially capitalize on market opportunities.

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