Can you provide some examples of successful trades made using the RSI in crypto?

The RSI helped traders identify key reversals in Bitcoin, Ethereum, and BNB by signaling overbought and oversold conditions, often combined with divergence and price action for high-probability entries.

Aug 02, 2025 at 07:35 pm

Understanding the RSI in Cryptocurrency Trading

The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements on a scale from 0 to 100. In the cryptocurrency market, where volatility is high and price swings are frequent, the RSI serves as a valuable tool for identifying overbought and oversold conditions. When the RSI value exceeds 70, the asset is typically considered overbought, suggesting a potential reversal or pullback. Conversely, an RSI below 30 indicates oversold conditions, which may signal a buying opportunity. Traders use these thresholds to time their entries and exits, especially in ranging or consolidating markets.

Bitcoin (BTC) Bull Run Reversal Trade – April 2021

During the Bitcoin bull run in early 2021, the price surged from around $30,000 in January to nearly $65,000 by mid-April. As the price climbed, the RSI on the daily chart consistently rose above 70, indicating overbought conditions. On April 14, 2021, the RSI reached 84, a strong signal of extreme overbought momentum. Traders who monitored this level could have initiated a short position or taken profits on long holdings.

• Monitor the daily RSI crossing above 70 and approaching 80
• Confirm with price action showing wick-heavy candles or rejection at resistance
• Enter a short trade or close long positions when RSI hits 80+
• Set a stop-loss just above the recent swing high
• Exit when RSI drops back below 70 or reaches 50

This trade allowed participants to avoid the sharp correction that followed, as Bitcoin dropped to $47,000 within a week, offering a potential 20%+ move on the downside.

Ethereum (ETH) Oversold Bounce – July 2022

In the aftermath of the crypto market crash in mid-2022, Ethereum fell from over $3,000 to below $1,000. By July 16, 2022, the price had dropped to $1,050, and the daily RSI dipped to 28, nearing the oversold threshold. This presented a potential long entry opportunity for swing traders. The RSI began to rise while price stabilized, forming a bullish divergence.

• Identify when RSI drops below 30 on the daily timeframe
• Look for bullish divergence — price makes a lower low, but RSI makes a higher low
• Wait for RSI to cross back above 30 as confirmation
• Enter a long position near $1,050 with a stop-loss below $980
• Hold as RSI climbs toward 50 and price recovers

Over the next six weeks, Ethereum rebounded to $1,800, delivering a 70% return for those who acted on the RSI signal combined with divergence analysis.

BNB Reversal After FTX Collapse – November 2022

Following the FTX exchange collapse, Binance Coin (BNB) experienced a severe sell-off. On November 9, 2022, BNB plunged from $290 to $215 in a single day. The 4-hour RSI dropped to 22, a deep oversold level. While panic selling dominated headlines, technical traders noticed the RSI was far below 30, suggesting exhaustion in selling pressure.

• Observe extreme RSI readings below 25 on lower timeframes during panic events
• Check for volume contraction indicating reduced selling momentum
• Confirm with candlestick reversal patterns like hammer or bullish engulfing
• Enter a scaled long position starting at $218 with tight risk management
• Use a trailing stop as RSI recovers past 50

Within two weeks, BNB recovered to $280, allowing traders who used RSI as a contrarian signal to capture a 30% gain during a highly volatile period.

Solana (SOL) Range-Bound Strategy – Q1 2023

Throughout early 2023, Solana traded within a defined range between $16 and $25. During this phase, the RSI on the 4-hour chart repeatedly oscillated between 30 and 70, making it ideal for range-based trading. Traders could have executed multiple successful buy-low, sell-high cycles using RSI crossovers.

• When RSI crossed below 30, initiate a long entry near $16.50
• Place a stop-loss at $15.00 to limit downside
• Take profit when RSI approaches 70 and price nears $24.50
• Reverse the trade by entering short at RSI 70+
• Cover shorts when RSI falls back to 50 or below

This strategy yielded 5–6 profitable trades over a 90-day period, with average gains of 15–20% per long cycle and 10–12% on short entries, demonstrating the effectiveness of RSI in sideways crypto markets.

Using RSI Divergence in Cardano (ADA) – August 2023

In August 2023, Cardano’s price declined from $0.32 to $0.26, making lower lows. However, the daily RSI formed higher lows, signaling bullish divergence. This hidden strength suggested that downward momentum was weakening despite the price drop. Traders watching this developed a high-conviction long setup.

• Identify price making lower lows while RSI makes higher lows
• Wait for RSI to cross back above 40 as momentum shifts
• Enter long near $0.265 with stop-loss at $0.245
• Target initial exit at $0.30 (prior resistance)
• Extend position as RSI moves toward 60

The price rallied to $0.35 by late September, rewarding divergence-based RSI traders with a 30%+ return.

Frequently Asked Questions

What is the best RSI setting for crypto trading?

The default 14-period RSI is widely used, but many crypto traders adjust it to 10 or 12 periods for increased sensitivity in fast-moving markets. Shorter periods generate more signals but also increase false positives. Testing on historical data for specific coins like BTC or ETH helps determine optimal settings.

Can RSI be used alone for trading decisions?

While RSI provides strong signals, it is not reliable in isolation. Combining it with support/resistance levels, volume analysis, and candlestick patterns improves accuracy. For example, an oversold RSI at a major support zone carries more weight than one in a free-fall market.

How do you avoid false RSI signals during strong trends?

In strong uptrends, RSI can remain above 70 for extended periods, leading to premature short entries. To avoid this, only take overbought signals in resistance zones or during distribution patterns. Similarly, in downtrends, wait for RSI to stabilize above 30 before considering longs.

Is RSI more effective on certain timeframes?

The daily and 4-hour charts offer the most reliable RSI signals for swing trading. Lower timeframes like 5-minute or 15-minute generate excessive noise. For day trading, combine 4-hour RSI trends with 1-hour overbought/oversold entries for better timing.