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RSI is probably the most common but also most misunderstood indicators. Despite its widespread use, I feel it’s undervalued & overlooked.
I want to share some things:
1) why RSI is misunderstood
2) why it’s overlooked
3) why it’s valuable for crypto
I want to share some things:
1) why RSI is misunderstood
2) why it’s overlooked
3) why it’s valuable for crypto
1.1) RSI is misunderstood
RSI is first & foremost an indicator to determine strength, relative to X number of closing candles.
That’s it.
People misunderstand its definition & use it for complex reasoning it wasn’t designed for...
RSI is first & foremost an indicator to determine strength, relative to X number of closing candles.
That’s it.
People misunderstand its definition & use it for complex reasoning it wasn’t designed for...
1.2
People use it for complex TA like S&R & all this stuff. That’s not what it’s used for.
People also assume if it’s high/low then that means top/bottom is in. That’s also false. In fact, it’s the opposite. It means the trend is strong & likely to continue.
People use it for complex TA like S&R & all this stuff. That’s not what it’s used for.
People also assume if it’s high/low then that means top/bottom is in. That’s also false. In fact, it’s the opposite. It means the trend is strong & likely to continue.
2.1) RSI is overlooked
People disregard RSI for two reasons; 1) it’s used like
in 1 which doesn’t work, so they assume it’s worthless, and 2) everyone seems to use it so it must be unreliable.
People disregard RSI for two reasons; 1) it’s used like
in 1 which doesn’t work, so they assume it’s worthless, and 2) everyone seems to use it so it must be unreliable.
2.2)
There’s a common theory that the more ppl use X strategy then it loses its value.
False. Strategies don’t necessarily lose its execution by popularity. This is bc: 1) ppl use this relative to liquidity, and 2) most ppl are not typically good at trades even if spoon fed
There’s a common theory that the more ppl use X strategy then it loses its value.
False. Strategies don’t necessarily lose its execution by popularity. This is bc: 1) ppl use this relative to liquidity, and 2) most ppl are not typically good at trades even if spoon fed
2.3)
There’s also a misconception that in order to be a great trader, you need to have complex strategies.
Wrong.
You just need a simple system. Also, some of the best trades this year and last have been dead simple ones.
Which brings me to part 3.
There’s also a misconception that in order to be a great trader, you need to have complex strategies.
Wrong.
You just need a simple system. Also, some of the best trades this year and last have been dead simple ones.
Which brings me to part 3.
3.1) why RSI is valuable for crypto
In short: it’s amazing predictable in discovering divergences that actually execute.
Since Dec 2017, RSI divs have shown the top, mids, and bottoms of the BTC market cycle.
When RSI divs occur, this indicates an obvious strength change.
In short: it’s amazing predictable in discovering divergences that actually execute.
Since Dec 2017, RSI divs have shown the top, mids, and bottoms of the BTC market cycle.
When RSI divs occur, this indicates an obvious strength change.
3.2)
This strength change tells you plainly that “hey, so we’re bullish & all but this higher move was kinda weak, maybe we’re headed down”.
Strength is starting to shift, at least temporarily.
This strength change tells you plainly that “hey, so we’re bullish & all but this higher move was kinda weak, maybe we’re headed down”.
Strength is starting to shift, at least temporarily.
3.3
Going back to misunderstood, ppl generally don’t apply RSI divs correctly.
Divs are calculated by closing candles. Not opens, highs, or lows. Wicks to not determine divs.
Going back to misunderstood, ppl generally don’t apply RSI divs correctly.
Divs are calculated by closing candles. Not opens, highs, or lows. Wicks to not determine divs.
3.4
Here’s an example from Q42018 and Q12019.
The literal bottom on the 3D gave us a RSI bull div. The midterm correction at $13800 also gave a bear div. The other picture is the ATH bear div for ETH on 1D
This honestly feels like cheating it’s so easy.
Here’s an example from Q42018 and Q12019.
The literal bottom on the 3D gave us a RSI bull div. The midterm correction at $13800 also gave a bear div. The other picture is the ATH bear div for ETH on 1D
This honestly feels like cheating it’s so easy.
4.1 Added Note
Some of you are missing easy areas where you should be taking profit at minimum. This is not to shame you, but to encourage you to always learn and improve.
RSI divs, have been good to me. It gets hate for unknown reasons imo.
Use what you can to always improve.
Some of you are missing easy areas where you should be taking profit at minimum. This is not to shame you, but to encourage you to always learn and improve.
RSI divs, have been good to me. It gets hate for unknown reasons imo.
Use what you can to always improve.
