What is Relative Strength Index (RSI)?
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Let's find out Relative Strength Index (RSI) meaning, definition in crypto, what is Relative Strength Index (RSI), and all other detailed facts.
The Relative Strength Index (RSI) is a technical indicator derived from a price momentum of an asset that measures the price of the asset and how fast it changes. The movements of the price are considered to be oscillations. RSI oscillations can be rated between 0-100.
The RSI is calculated using the price change of an asset over 14 periods on a daily (or an hourly) chart. The average gain and loss of an asset over a period are split and plotted on the 0 to 100 scale to determine the RSI.
RSI can be used to determine if an asset is oversold or overbought. When the indicator reflects figures higher than 70 – an asset is overbought and when it reflects figures lower than 30 – it’s oversold.
Traders use RSI to identify asset price trends, divergences, and potential changes. Talking about the potential trend reversals, RSI helps to identify support and resistance levels that determine whether a market is exhibiting a bullish or bearish divergence.
When the RSI rises while the price of an asset continues to fall – it is a bullish divergence. This indicates that, despite the asset's declining value, more people are purchasing it. A bearish divergence occurs when the price of an asset rises while the RSI falls. This indicates that the asset's price growth is starting to lose pace.