RSI + Price Action Trading
RSI creates a (a) moving average between the price close with the candle prior with a higher value and another moving average whit closing candles with lower (b) values than prior, after it gives you a percentage (a/b) defining the relationship between those two moving averages.
Many people use the term overbought and oversold when values are above 70 and bellow 30, respectively, in my opinion, ranging at 50 gives you a neutral bias, and after a pump if we sustain above 70, im fully bullish. otherwise the same when bellow 30, with a bearish bias.
This chart shows you the BTCUSD in two situations , one on the prior pump when we reach the 4200 area, and another one this week, where we pump and RSI didn't sustain above 70. We dumped after noticing about 3 days of bearish divergence on this indicator.
Finally in my opinion, I dont 100% rely on indicators only, they just helps you to identify some biases and trends/ranging info.
Best Regards to all!
Many people use the term overbought and oversold when values are above 70 and bellow 30, respectively, in my opinion, ranging at 50 gives you a neutral bias, and after a pump if we sustain above 70, im fully bullish. otherwise the same when bellow 30, with a bearish bias.
This chart shows you the BTCUSD in two situations , one on the prior pump when we reach the 4200 area, and another one this week, where we pump and RSI didn't sustain above 70. We dumped after noticing about 3 days of bearish divergence on this indicator.
Finally in my opinion, I dont 100% rely on indicators only, they just helps you to identify some biases and trends/ranging info.
Best Regards to all!
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