In trying to add new technical analysis tools to my crypto trading I am finding new love for plain old vanilla RSI. Here are three quick examples from today – January 24, 2018.
RSI in the BTC Chart
The first is the most recent BTC move down which started on January 6, 2018. Well before the Ichimoku cloud signaled a downward move on January 16, 2018, the RSI and price movement were giving indications of weakness in the upward move starting on January 6th. You can see the tweezer top followed by a telegraphed short fall and then a resurgence back up in price without a corresponding move higher in RSI. Volume, which I neglected to include on this screenshot also reflected the lack of enthusiasm in the move. Granted hindsight is 20/20. And the dragonfly candle immediately following the top might have headfaked anyone watching. But the subsequent move downwards should have confirmed the validity of the previous indicators.
RSI in the Present Moment
The second example is actually unfolding as I type. So we will see how well this holds up. This is DGB from today. On the chart you can see several indicators lining up.
- A Golden Cross (when the 50MA crosses the 200MA to the positive)
- A potential Adam and Eve pattern forming as drawn in the yellow V and U marks on the chart.
- Finally – the divergence in the RSI at the bottom.
Specifically the RSI seems to be confirming that this latest down move doesn’t have the strength of the last. If that is the case then we may indeed form a double bottom with price rising from here. We’ll check back in a few days to see if this move actually confirmed itself or not.
The last example is LBC, also from today. LBC seems to be mimicking DGB with a golden cross forming, RSI having a bull div and a potential Adam and Eve forming.
To close, remember, technical analysis is merely a stacking up of probabilities. Then theorizing about what might come next. I’m feeling bullish right now on DGB and LBC based on these charts. But who knows if a black swan will put its thumb on the scales in the next few hours/days and wreck these weighted possibilities.