đ¨ RSI Divergence Crypto Trading Strategy example đ¨
 Certainly! Let's dive into the Relative Strength Index (RSI) and its divergence and convergence strategies for crypto trading. đ
1. **Understanding RSI Calculation:**
   - The RSI measures the strength and speed of price movements. It ranges from 0 to 100.
   - Key components:
     - **Average Gain**: Average price increase during a period (usually 14 days).
     - **Average Loss**: Average price decrease during the same period.
     - **Relative Strength (RS)**: Calculated by dividing average gain by average loss.
     - **RSI Formula**: $$RSI = 100 - \frac{100}{1 + RS}$$
   - RS values above 70 indicate overbought conditions, while values below 30 suggest oversold conditions.
2. **Bullish Divergence:**
   - Price makes a new low, but RSI forms a higher low.
   - Interpretation: Downtrend losing momentum; potential price reversal to the upside.
   - Confirm with bullish candlestick patterns or support levels.
3. **Bearish Divergence:**
   - Price makes a new high, but RSI forms a lower high.
   - Interpretation: Uptrend momentum weakening; potential price reversal to the downside.
4. **Advanced Techniques:**
   - Combine RSI with other tools (e.g., MACD, CCI) for stronger signals.
   - Look for divergence near prominent highs/lows on the chart.
Remember, RSI divergence can be a powerful tool, but always validate with additional indicators and price action. Happy trading! đđ
Sources:
1. [Master RSI: Effective Methods to Spot Divergence and Convergence](https://www.altrady.com/blog/crypto-trading-strategies/rsi-trading-strategy/identify-divergence-and-convergence)
2. [Divergences in Crypto Trading (Divergence Cheat Sheet inside)](https://www.altcointrading.net/divergences/)
3. [How To Use RSI In Crypto: 7 Steps To Trade The RSI Indicator](https://www.hedgewithcrypto.com/how-to-use-rsi-in-crypto/) š²³
