What is RSI in Crypto Trading?
RSI is a momentum oscillator measuring the speed and change of price movements on a scale of 0 to 100.
The Relative Strength Index (RSI) is one of the most widely used technical indicators in cryptocurrency trading. Developed by J. Welles Wilder Jr. in 1978, it helps traders identify overbought and oversold conditions in the market.
How RSI Works
RSI measures the magnitude of recent price changes to evaluate whether an asset is overbought or oversold. The indicator oscillates between 0 and 100, with key levels at 30 and 70:
- **RSI above 70**: The asset is considered overbought, potentially indicating a price pullback
- **RSI below 30**: The asset is considered oversold, potentially indicating a price bounce
- **RSI around 50**: Neutral momentum, no clear trend direction
RSI Formula
RSI = 100 - (100 / (1 + RS))
Where RS (Relative Strength) = Average Gain / Average Loss over the specified period (typically 14 days).
RSI in Crypto Markets
Cryptocurrency markets are more volatile than traditional markets, so some traders adjust the traditional 70/30 levels to 80/20 or even 85/15 for crypto. During strong bull markets, RSI can remain "overbought" for extended periods, so it's important not to use it as a standalone sell signal.
💡 Key Points
- ✓RSI measures momentum on a 0-100 scale
- ✓Above 70 = overbought, below 30 = oversold
- ✓In crypto, consider using 80/20 levels due to higher volatility
- ✓RSI divergence can signal potential trend reversals
- ✓Always combine with other indicators for confirmation
How to Use RSI (Relative Strength Index)
- 1Look for RSI dropping below 30 for potential buying opportunities
- 2Watch for RSI rising above 70 as a potential warning of overextension
- 3Identify divergences: price making new highs but RSI not confirming
- 4Use RSI crossing 50 to confirm trend direction changes
- 5Set alerts for extreme RSI levels using our screener
⚠️ Common Mistakes to Avoid
- ✗Selling immediately when RSI hits 70 (strong trends stay overbought)
- ✗Buying immediately when RSI hits 30 (falling knives can fall further)
- ✗Using RSI alone without price action confirmation
- ✗Not adjusting RSI levels for crypto's higher volatility
Try It in Action
Apply RSI (Relative Strength Index) to find trading opportunities.
Find Oversold Cryptos (RSI < 30) →