🔖The RSI indicator or Relative Strength Index is one of the technical analysis indicators used to measure price momentum and determine overbought and oversold conditions in financial markets.
🛡How to calculate RSI:
The indicator is calculated using the following formula: RSI=100−1001+RSRSI=100−1+RS100 Where: RS is the average gains in rising periods divided by the average losses in falling periods over a certain period (usually 14 days)
🛡How to interpret RSI:
🔗Above 70 → Indicates that the asset may be in an overbought condition and a correction or decline may occur.
🔗Below 30 → Indicates that the asset may be in an oversold condition and a bullish rebound may occur.
🔗Between 30 and 70 → Indicates a neutral zone without strong buy or sell signals.
🛡How is it used in trading?
🔗Overbought and oversold signals: When exceeding 70, a downward correction may occur, and when dropping below 30, a bullish rebound may happen.
🔗Divergence: If the price is rising while RSI is falling (or vice versa), this may indicate a potential reversal in trend.
🔗Breaking the 50 level:
If RSI breaks above the 50 level, it may indicate the continuation of the upward trend. If RSI breaks below the 50 level, it may indicate the continuation of the downward trend. $BTC #trading
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