Overview The Relative Strength Index (RSI) is a momentum oscillator developed by J. Welles Wilder Jr. to measure the magnitude of recent price changes. Calculation RSI = 100 - (100 / (1 + RS)) Where RS = Average gain of up days / Average loss of down days Interpretation 1. Overbought: RSI > 70 (price may drop) 2. Oversold: RSI < 30 (price may rise) 3. Neutral: RSI between 30-70 (price may fluctuate) Key Levels 1. 30: Oversold level (buy signal) 2. 70: Overbought level (sell signal) 3. 50: Neutral level (no signal) Signals 1. Bullish Divergence: RSI makes higher low, price makes lower low 2. Bearish Divergence: RSI makes lower high, price makes higher high 3. RSI Breakout: RSI breaks above/below key levels Settings 1. Period: 14 (default), adjustable to suit market conditions 2. Timeframe: Any (e.g., 1-minute, 1-hour, daily) Advantages 1. Identifies overbought/oversold conditions 2. Confirms trends 3. Provides early warning signals Limitations 1. False signals in strong trends 2. Lagging indicator 3. Should be used with other indicators Bitcoin Trading Strategies Using RSI 1. Mean reversion: Buy/sell when RSI reaches extreme levels 2. Trend following: Use RSI to confirm trends 3. Range trading: Buy/sell when RSI reaches key levels Best Practices 1. Combine RSI with other indicators 2. Adjust settings for market conditions 3. Monitor multiple timeframes 4. Use proper risk management 5. Continuously learn and improve analytical skills