RSI
RSI is a momentum indicator that measures how quickly and strongly an asset’s price has moved to help spot overbought or oversold conditions.
RSI, or Relative Strength Index, is a technical analysis indicator used to measure price momentum. It compares the size of recent gains with recent losses over a chosen period, often 14 candles, and displays a value from 0 to 100. In crypto trading charts, RSI is commonly used to judge whether a coin or token may be overbought, meaning buying has been strong, or oversold, meaning selling has been strong.
Traders often watch levels near 70 and 30: an RSI above 70 can suggest an asset has risen quickly, while an RSI below 30 can suggest it has fallen quickly. These signals are not guarantees, because strong trends can keep RSI high or low for a long time. For example, if Bitcoin’s price keeps making new highs but RSI starts making lower highs, some traders may see that as weakening momentum and look for confirmation from other indicators or price action.
Other terms in Technical Analysis
Bollinger Bands
A volatility indicator that plots bands around a moving average to show when a crypto asset may be unusually high, low, or entering a volatile period.
Bullish Divergence
A bullish divergence is a chart signal where price makes lower lows while an indicator makes higher lows, hinting that selling pressure may be weakening.
Candlestick Chart
A price chart that shows an asset’s open, high, low, and close over repeated time periods.
Fibonacci Retracement
A charting tool that marks possible support and resistance levels based on Fibonacci ratios after a price move.