Relative Strength Index Bitcoin Trading Analysis and RSI Bitcoin Trading Signals

Developed by J. Welles Wilder, described in the book "New Concepts in Technical Trading Systems".

RSI is the most popular indicator and it is a momentum oscillator and a bitcoin trend following indicator. RSI compares a bitcoin price magnitude of the recent btcusd price gains against its magnitude of recent losses btcusd price losses and plots this data on a scale of values that ranges between 0-100.

RSI measures the momentum of bitcoin crypto; values above 50 signify bullish momentum while values below 50 center-line signify bearish momentum.

• RSI is drawn as a green line
• Horizontal dashed lines are drawn to identifying overbought and oversold levels are i.e. 70/30 levels respectively.

Bitcoin Trading Analysis and Generating Bitcoin Trading Signals

There are several methods used to trade, these are:

50-level Crossover Signals

• Buy signal - when the indicator crosses above 50 a buy/bullish signal is given.
• Sell Bitcoin Trading Signal - when the indicator crosses below 50 a sell/bearish signal is given.

RSI Bitcoin Chart Patterns

Traders can draw bitcoin trend lines and map out cryptocurrency chart patterns on the RSI indicator. The RSI often forms cryptocurrency chart patterns such as head and shoulders cryptocurrency chart pattern which might not have formed clearly on the btcusd price chart.

Trading Support/Resistance Breakouts

RSI is a leading indicator and can be used to predict Support/Resistance Breakouts before btcusd price breaks its support/resistance level. RSI uses the swing failure signal to predict when btcusd price is about to break support and resistance levels.

Swing Failure - Support and Resistance Breakout

Overbought/Oversold Conditions

• Overbought- levels above 80
• Oversold- levels below 20

These levels can be used to generate bitcoin trading signals such as when RSI turns up from below 20 after oversold, buy and sell when RSI crosses to below 80 after overbought, sell. These signals are not suitable for trading Bitcoin because they are prone to a lot of whipsaws.

Divergence Bitcoin Trading Setups

Divergence trading is one of the technical analysis method used to trade reversals of the btcusd price trends. There are 4 types of divergences that can be traded with this indicator covered in the divergence tutorial on this website.