RSI

The RSI (Relative Strength Index) indicator gives quite good signals at the time when a given action is in a horizontal trend. RSI simply gives the trader idea of the speed and change of the price movements.

To analyze chart using this indicator, it is necessary to determine the overbought and oversold levels. The overbought level is usually set at 70-80% and the sell-out level at 20-30%.

 

Let’s look at the LTCBTC 4hour chart.

The buy signal (B) is generated with the indicator rising above the sell-out level.

The sales signal (S) is generated when the indicator drops below the w level.

We can notice that the LTCBTC has formed a horizontal price action. Based on that scenario, you would build up you position whenever RSI is below 30 and sell some of your position (eg 25% of all holdings) every time RSI reaches 70.

Learn how RSI is calculated here

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