What is RSI and how we can use it?
When we think about trading cryptocurrencies, we often start looking for tools that will help us understand or predict specific movements on the charts. Today, we introduce you to the RSI (Relative Strength Index) which may help you to do that.
In the simplest terms, the RSI can be defined as an oscillator that determines the strength of a trend in technical analysis. This index is measured in values from 0 to 100. Traditional interpretations indicate that RSI values above 70 points suggest the cryptocurrency (or another asset) overvalued the given security, so it has a chance to reverse the current trend. Similarly, values below 30 indicate that the asset is undervalued.
Remember that the shorter the period, the more sensitive the oscillator and the wider its amplitude. The relative strength indicator works well when its oscillations reach the lower and upper extremes. Typically, data from 14 periods are used to calculate the RSI.
The RSI may be a helpful indicator supporting building an investment strategy. Remember that technical analyses do not always work well in the cryptocurrency market. When trading with leverage, it’s a good idea to use all the tools available to improve your strategy.
The Geco.one cryptocurrency derivatives exchange allows you to display the RSI oscillator just below the chart, which can help you build an investment strategy.