Litecoin trade using RSI S/R levels
I have not talked much about Litecoin. Litecoin is one of the Major 3 of the cryptocurrency sphere; the other two being Bitcoin and Ethereum. Traders and investors of Litecoin have experienced some significant upside momentum every since the release of the futures contract for Bitcoin on Sunday, December 10th.
I’ve created several vertical lines on the chart that are placed on both the price and RSI zones. There are also two horizontal lines on the RSI (thick black lines).
One of the first things that traders learn to apply to a chart is a support/resistance line. These are often drawn on the price chart to determine historical highs and lows and to find possible reversal areas or strong continuations. We can apply the same principles to the RSI.
The RSI has two extreme levels, overbought and oversold. The RSI considers overbought conditions when it is 70 and greater. And it is considered oversold when it is 30 and lower. However, each instrument can form its own dynamic strength and resistance zones on an RSI. What I mean is that the default oversold and overbought levels of 30 and 70 are not static and are just suggested.
When we look at Litecoin’s RSI and look at the bottoms that the RSI makes, notice how often price will make a move up. Now, not every single move up is as drastic or powerful, they don’t need to be. The most important thing to take away from this is to analyze and identify repeating tops and bottoms in the RSI of any instrument.
It is also important to make sure that the highs and lows in the RSI that you draw coincide with a top and bottom in price. Essentially, for oversold conditions, we want to have price at a historic support area and the RSI being oversold and at a historic RSI support level. Just those two tools can help you find an entry into a countertrade and improve your trade entries.