How Traders Use RSI for Spot Trading

Buying at Oversold Levels (Below 30)

When RSI goes below 30, it is a sign that the coin is oversold, i.e., it might be undervalued.

Traders look for a change in price and enter a buy position here.

Example: If XRP’s RSI is 25 and starts moving up, traders may buy expecting a price recovery.

Selling at Overbought Levels (Above 70)

If RSI goes above 70, it means that the coin is overbought, and the price may go down.

This signal is used by traders to sell and profit before a downturn.

Example: If the RSI of Bitcoin is 80, traders may sell some assets before a correction.

Confirming Trades Using RSI Divergence

Bullish Divergence: Price is decreasing, but RSI is increasing → Potential reversal to the upside.

Bearish Divergence: Price is increasing, but RSI is decreasing → Potential reversal to the downside.

Example: If Solana’s price makes a new low, but RSI moves higher, it can be a sign of an impending rally.

Best RSI Settings for Crypto Trading

The default setting for RSI is 14-period, though traders sometimes alter it:

7-period RSI: Produces faster signals, ideal for short-term trading.

21-period RSI: Slower signals, better suited to longer-term trades.

Final Tips for RSI Spot Trading

✔️ Utilize RSI along with other indicators like Moving Averages & Volume for greater accuracy.

✔️ Always consider RSI on several timeframes (5-min, 1-hour, daily) for stronger signals. ✔️ Don’t trade based on RSI alone—market direction and news matter as well.

By mastering RSI, traders can make smarter spot trades on XRP, Bitcoin, Solana, BNB, and other cryptos, hitting profitable entries and exits like a boss.