RSI is an oscillator indicator.RSI is used by crypto traders to know whether the market of a given cryptocurrency has become oversold or overbought.RSI ranges between 0 to 100 while the market analysis is done between 30 to 70. When RSI falls below 30, that will be an indication of an oversold market while when it rises above 70, that will be an indication of an overbought market.
RSI on oversold cryptocurrency market
On oversold market, the RSI will fall below 30 thus signaling the cryptocurrency trader to buy a certain number of a given cryptocurrency and hold them until their price has risen above what they will have purchased with. This is indicated as from the first candlesticks chart below;
The chart above represents the market for TRON against USDT
From the candlesticks chart above, there is point A which represents an oversold market condition. At that point, the RSI has fallen below 30 thus an indication of an oversold market. This will signal the cryptocurrency trader to make a buy order of a certain number of TRON and hold them until the price rises in order to increase the value of their account. The trader can decide to make a buy order using the limit price or the market price. When the order is being executed, the account of the trader will now have increased in terms of USDT.
RSI on overbought cryptocurrency market
On overbought market, the RSI will rise above 70 thus signaling the cryptocurrency trader to sell a certain number of a given holding cryptocurrency which he/she had previously purchased in order to avoid his trading account from declining in value. This is indicated as from the second candlesticks chart below
The chart above represents the market for TRON against USDT
From the candlesticks chart above, there is point A which represents an overbought market condition. At that point, the RSI has risen above 70 thus an indication of an overbought market. This will signal the cryptocurrency trader to make a sell order of a certain number of TRON . The trader can decide to make a sell order using the limit price or the market price. When the order is being executed, the account of the trader will now have increased in terms of USDT.
Recommendation: Cryptocurrency market is highly volatile. When you place a buy order, make sure to apply risk management to be safer incase your buy order goes against you.
