Beginner’s Guide Part 3
Basic Relative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum indicator that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a market. The RSI is displayed as an oscillator that has a reading from 0 to 100.
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If the RSI crosses above the value of 70, it means the market is currently overbought. When an asset is overvalued, usually it may be primed for a trend reversal or corrective pullback in price.
If the RSI crosses below the value of 30, it means the market is currently oversold. When an asset is undervalued, usually it will gain back its value and goes back up in price.
Using the RSI indicator on its own is difficult to profit. It is advisable to combine with the other 2 indicators which are the Moving Averages & MACD. If you haven’t read the previous beginner’s guide, you can click the link here.
Add all the indicators to your chart and make demo trades, you’ll get better at implementing these 3indicators in your trading strategy. Don’t urge yourself to use real money to trade first, learn the basics until you see your demo trades are making good results.
DISCLAIMER: This is just a very basic tutorial that teaches you how to use the indicators and is not financial advice. This article is for educational purposes only, please use it at your own risk. The cryptocurrency market is very volatile and unpredictable. Crypto Brothers will not assume any liability for direct or indirect losses.
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