Relative Strength Index (RSI)

ALL 0-9 $A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Technical Indicators • Price Action • Chart Signals

momentum oscillator for overbought/oversold detection

Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of recent price changes to identify overbought or oversold conditions in a market. Ranging from 0 to 100, RSI helps traders determine whether an asset is trending too aggressively in one direction, signaling potential reversal or consolidation points. Readings above 70 typically indicate overbought conditions, while readings below 30 suggest oversold conditions.

Use Case: A trader exits a long position when the RSI crosses above 70, anticipating a trend slowdown and potential price correction.

Key Concepts:

Trend Exhaustion Indicators — Tools for spotting weakening momentum in price trends
Support Levels — Zones where oversold conditions may stabilize price
Resistance Levels — Areas where overbought conditions often trigger reversals
Volume Divergence — Confirms RSI signals by showing weakening trend strength
Emotional Saturation — Psychological extreme that often aligns with RSI extremes
Peak Sentiment Overload — Sentiment tipping point confirming overbought conditions
Cycle Thresholds — Critical transition points where RSI reversals often occur
Bitcoin Dominance — RSI divergence on dominance charts signals rotation

Summary: RSI is a core momentum indicator for detecting when market trends are overextended. It helps traders time entries and exits by signaling when buying or selling pressure is unsustainable.

Feature	Traditional	Web3
Primary Use	Stocks and forex to identify overbought or oversold zones	Applied to crypto charts for timing exits during rapid bull runs
Confirmation	Combined with candlestick patterns or moving averages	Integrated with on-chain volume or liquidity divergence

RSI Zones Guide

understanding the 0-100 scale

RSI Range	Zone	Signal	Action
80-100	Extreme Overbought	Euphoria, blow-off top risk	Strong exit signal
70-80	Overbought	Trend exhaustion likely	Tighten stops, scale out
50-70	Bullish Momentum	Healthy uptrend	Hold or add on dips
30-50	Bearish Momentum	Downtrend in progress	Wait or short
20-30	Oversold	Potential bounce	Watch for reversal
0-20	Extreme Oversold	Capitulation, accumulation zone	Strong buy signal

RSI Divergence Types

advanced signals for trend reversals

Divergence Type	Price Action	RSI Action	Signal
Bullish Divergence	Price makes lower low	RSI makes higher low	Upward reversal likely
Bearish Divergence	Price makes higher high	RSI makes lower high	Downward reversal likely
Hidden Bullish	Price makes higher low	RSI makes lower low	Uptrend continuation
Hidden Bearish	Price makes lower high	RSI makes higher high	Downtrend continuation

RSI Strategy Checklist

practical application for crypto traders

Oversold Entry (RSI < 30)

☐ RSI below 30 on higher timeframe
☐ Check for bullish divergence
☐ Confirm support level nearby
☐ Wait for RSI to cross back above 30
☐ Scale in with DCA approach
☐ Set stop below recent low

Overbought Exit (RSI > 70)

☐ RSI above 70 on higher timeframe
☐ Check for bearish divergence
☐ Confirm resistance level nearby
☐ Begin scaling out positions
☐ Rotate profits to $KAG/$KAU
☐ Don’t short — wait for confirmation

RSI + Other Indicators

☐ MACD for trend confirmation
☐ Volume for participation
☐ Support/Resistance levels
☐ Moving averages for direction
☐ Funding rates (crypto)
☐ On-chain metrics

Common RSI Mistakes

☐ Trading RSI alone (need confluence)
☐ Shorting just because RSI > 70
☐ Ignoring timeframe context
☐ Not waiting for divergence confirmation
☐ Using default 14-period only
☐ Missing hidden divergences

The Principle: RSI is a powerful momentum gauge — but it’s a warning system, not a crystal ball. Overbought doesn’t mean “sell now” and oversold doesn’t mean “buy now.” The real edge comes from combining RSI extremes with divergence patterns, support/resistance levels, and sentiment markers. When RSI screams overbought AND you see bearish divergence AND sentiment is euphoric — that’s when you rotate into hard assets like $KAG/$KAU and secure your Ledger. The indicator doesn’t lie — but it needs context to speak clearly.

« Index