The Relative Strength Index (RSI) is a popular momentum indicator used in technical analysis to measure the speed and change of recent price movements in a cryptocurrency. As with traditional finance (TradFi), RSI is displayed as an oscillator on a scale of 0 to 100, providing insights into whether an asset is overbought or oversold based on its recent price momentum over a specified period, usually 14 days.
For beginners, the RSI serves as a valuable indicator to identify potential buying or selling opportunities in the market. When the RSI value exceeds 70, it suggests that the cryptocurrency may be overbought, indicating a potential sell signal. Conversely, when the RSI falls below 30, it indicates that the cryptocurrency may be oversold, presenting a potential buying opportunity.
Combining RSI analysis with fundamental research can provide a more comprehensive understanding of an individual cryptocurrency’s potential price movements, as other factors like upcoming token drops or roadmap milestones (upgrades, halvings, etc.) can also influence its price.
