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