If you guys read my post about tron and how to use the RSI to find divergence, then you'll know that I also said, it's not recommended to make trades simply based on oversold or overbought conditions. I will say it again if that wasn't clear. Buying a coin simply because it's under 30 (oversold) is a TERRIBLE strategy. Selling because the RSI is over 70 (overbought) is also a TERRIBLE idea. RSI isn't that simple except in certain cases like the one I'm showing you today. This is probably the only time I will say to buy because it's oversold. So let's get into it.
We are looking at bitcoin on the daily chart. So each candle represents 1 day. If you look at the RSI, every single time it touches the oversold area, the price reverses. I've circled each time it has touched oversold and circled the corresponding price action. You will see that we recently touched oversold and now price has rebounded.
So if you see the price falling, when in doubt, wait for the RSI on the daily chart to be oversold. And yes only on the daily chart. Don't use this strategy anywhere else unless you notice a clear pattern. You can actually go back and look at every time the RSI was oversold. What do you notice? The price has ALWAYS rebounded. I'll say it again, the price has rebounded EVERY single time that the RSI was oversold. This does not apply to the RSI being overbought. Again, This does not apply to the RSI being overbought. I repeat things to make sure you understand it very clearly.
If you want to learn TA and be proficient at it then you need to practice. Don't just read what I wrote and move on. Look at it on your own chart. Pull up bitcoin on the daily chart and look at all the times it's oversold. Where does price go? How high does it go before down trending again? How long did that uptrend last? This will help you analyze charts on your own. Maybe you won't find any patterns or maybe you will. I see at least one interesting pattern, but do you? Comment down below what you think it is.
We are looking at bitcoin on the daily chart. So each candle represents 1 day. If you look at the RSI, every single time it touches the oversold area, the price reverses. I've circled each time it has touched oversold and circled the corresponding price action. You will see that we recently touched oversold and now price has rebounded.
So if you see the price falling, when in doubt, wait for the RSI on the daily chart to be oversold. And yes only on the daily chart. Don't use this strategy anywhere else unless you notice a clear pattern. You can actually go back and look at every time the RSI was oversold. What do you notice? The price has ALWAYS rebounded. I'll say it again, the price has rebounded EVERY single time that the RSI was oversold. This does not apply to the RSI being overbought. Again, This does not apply to the RSI being overbought. I repeat things to make sure you understand it very clearly.
If you want to learn TA and be proficient at it then you need to practice. Don't just read what I wrote and move on. Look at it on your own chart. Pull up bitcoin on the daily chart and look at all the times it's oversold. Where does price go? How high does it go before down trending again? How long did that uptrend last? This will help you analyze charts on your own. Maybe you won't find any patterns or maybe you will. I see at least one interesting pattern, but do you? Comment down below what you think it is.