PlanB RSI

Tutorial: Bitcoin Relative Strength Index (RSI) Indicator

Summary

The Relative Strength Index (RSI) is a momentum indicator that measures the speed and magnitude of Bitcoin’s price movements.

• It ranges from 0 to 100, showing overbought or oversold conditions.

• High RSI often signals overheated markets; low RSI suggests undervaluation.

• RSI helps identify short- to mid-term cycle turning points.

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Steps to Use the Bitcoin RSI Indicator

1. Understand the Concept

• RSI Formula: Compares average gains vs. average losses over a period.

• Scale: Above 70 = overbought; Below 30 = oversold.

• Relevance: Captures trader sentiment and market momentum.

2. Interpret the RSI Chart

• Dots (RSI values): Colored by months until halving (red = far, blue = near).

• Yellow line: RSI average smoothing trend.

• High RSI peaks: Indicate overheated rallies.

• Low RSI troughs: Suggest accumulation opportunities.

3. Analyze Historical Patterns

• Cycle tops: Often align with RSI > 90.

• Cycle bottoms: Commonly appear when RSI < 40.

• Halving connection: RSI patterns tend to reset and rise after halvings.

4. Make Decisions

• During high RSI (>70): Be cautious, markets may correct.

• During low RSI (<40): Consider accumulation opportunities.

• Watch averages: Confirm short-term signals with the longer RSI average.

Tips

• Use RSI with moving averages for stronger confirmations.

• Compare RSI peaks across cycles to spot repeating patterns.

• Monitor halving-colored dots for timing context.

• Combine with S2F or 200WMA for macro alignment.

• Avoid relying on RSI alone; context is essential.

How to Use the Indicator Effectively

RSI helps detect momentum shifts and cycle extremes. It is best applied to:

• Identify potential tops (overbought).

• Spot bottoms (oversold).

• Align entries and exits with cycle momentum rather than only price.

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Created By

Created By: The RSI was originally developed by J. Welles Wilder Jr. and adapted here for Bitcoin by PlanB.