How to buy when the monthly RSI rebounds in the oversold area + weekly Yang line reverses + daily line stands on the 5-day line?

A monthly RSI rebound from oversold levels, confirmed by a weekly bullish Yang line and daily price holding above the 5-day MA, signals a high-probability long opportunity.

Jul 26, 2025 at 08:01 am

Understanding the Monthly RSI Oversold Rebound

When analyzing a cryptocurrency's long-term momentum, the Monthly RSI (Relative Strength Index) plays a crucial role in identifying extreme market conditions. The RSI is a momentum oscillator that measures the speed and change of price movements on a scale from 0 to 100. An RSI value below 30 is traditionally considered oversold, indicating that the asset may be undervalued or oversold after a prolonged downtrend. A rebound from the oversold zone on the monthly chart suggests a potential shift in momentum, possibly signaling the beginning of a new bullish phase. This is not a standalone buy signal, but it serves as a foundational condition in the strategy. To confirm a true rebound, traders should observe the RSI crossing back above 30 after being below it, accompanied by increasing volume or a bullish candlestick pattern such as a hammer or engulfing bar.

Interpreting the Weekly Bullish Reversal (Yang Line)

The term "Yang line" refers to a green or bullish candlestick on the weekly chart, particularly one that forms after a series of red (bearish) candles. A weekly bullish reversal candle indicates that buying pressure has overcome selling pressure at a key support level. To qualify as a meaningful reversal, the Yang line should exhibit certain characteristics:

• It closes significantly above its opening price.
• It has a small or absent upper shadow, showing strong buying conviction.
• It appears after at least two or three consecutive bearish weekly candles.
• It may form near a known support level, Fibonacci retracement level, or long-term moving average such as the 200-week MA.
  

  This reversal suggests that institutional or large-scale investors may be entering the market, which increases the probability of a sustainable upward move. Traders should wait for the weekly candle to close fully to avoid false signals caused by intra-week volatility.

  Daily Price Action: Holding Above the 5-Day Moving Average

  
  The daily 5-day moving average (MA) acts as a short-term trend filter. When the price consistently stands on or above the 5-day MA, it indicates that recent momentum is stabilizing or turning positive. This condition helps eliminate false entries during choppy or sideways markets. To verify this:
• Ensure that the closing price of the current daily candle is above the 5-day MA.
• Check that the 5-day MA is beginning to flatten or turn upward after a downtrend.
• Confirm that the volume on the days when the price moves above the MA is higher than average, indicating real buying interest.
  

  Using the 5-day MA rather than longer MAs like the 20-day allows for earlier entry while still filtering out minor noise. However, this also means the signal can be more sensitive to short-term volatility, so combining it with the monthly and weekly filters increases reliability.

  Step-by-Step Entry Strategy Using This Triad

  
  To execute a buy based on this multi-timeframe confluence, follow these steps:
• Monitor the monthly RSI and wait for it to rise from below 30 to above 30, confirming a rebound.
• Check the most recent weekly candle to ensure it is a bullish (Yang) candle that closes higher than its open and follows a downtrend.
• Examine the daily chart and confirm that the price has closed above the 5-day MA for at least one full session.
• Wait for the next daily candle to open and only enter if the price remains above the 5-day MA during the session.
• Place a buy limit order slightly above the daily open to capture the momentum if the price continues upward.
• Set a stop-loss just below the low of the weekly reversal candle or below the recent swing low on the daily chart.
• Use a risk-reward ratio of at least 1:3, targeting resistance levels such as previous highs or Fibonacci extensions.
  

  This approach ensures that all three timeframes align, reducing the likelihood of entering during a temporary bounce.

  Tools and Platforms for Monitoring These Indicators

  
  To effectively apply this strategy, traders need access to a reliable charting platform that supports multi-timeframe analysis and customizable indicators. Recommended tools include:
• TradingView: Offers RSI, moving averages, and candlestick analysis across monthly, weekly, and daily charts. You can set up alerts for RSI crossing 30 or price closing above the 5-day MA.
• Binance or Bybit Pro Charting Interface: Built-in technical tools allow real-time monitoring of crypto assets with full customization.
• CoinGecko or CoinMarketCap: Useful for identifying assets that have recently shown strong weekly reversals across multiple cryptocurrencies.
• Custom Scanners: Use TradingView’s stock screener to filter cryptocurrencies where the monthly RSI is rising from below 30, the latest weekly candle is green, and the daily close is above the 5-day MA.
  

  Ensure all data is adjusted for splits and delistings, especially when analyzing older monthly data for altcoins.

  Risk Management and Position Sizing

  
  Even with a high-probability setup, risk management is essential. Never allocate more than a fixed percentage of your portfolio to a single trade—common guidelines suggest 1% to 5% per trade depending on account size and risk tolerance. Calculate position size based on the distance between entry and stop-loss:
• Determine your maximum acceptable loss in USD or base currency.
• Divide that amount by the difference between entry price and stop-loss price.
• The result is the number of units you can safely buy.
  

  For example, if you’re willing to risk $100, your entry is $10, and your stop-loss is $9.50, the risk per unit is $0.50. $100 / $0.50 = 200 units. This prevents emotional decision-making and preserves capital over time.

  Frequently Asked Questions

  
  What if the monthly RSI rebounds but the weekly candle isn’t fully closed yet?
  Wait for the weekly candle to close before taking action. Premature entries based on incomplete data can lead to false signals. Use the time to prepare your order and confirm all other conditions.
  

  Can this strategy be applied to altcoins with limited historical data?
  
  Yes, but only if the altcoin has at least 12 months of trading history to generate a reliable monthly RSI. For newer tokens, the lack of data may distort the RSI reading, making it less trustworthy.

  How do I adjust the 5-day MA for different market conditions?
  
  The 5-day MA is fixed for this strategy. Changing it to another period would alter the signal timing and break the consistency of the system. Stick to the defined parameters to maintain strategy integrity.

  Is volume confirmation necessary for the weekly Yang line?
  
  While not mandatory, high volume on the weekly reversal candle increases the validity of the signal. Low volume reversals may indicate weak participation and are more prone to failure.