How the RSI Indicator Works

The Relative Strength Index (RSI) is one of the most popular technical analysis indicators used by traders. It is a momentum oscillator that measures the speed and change of price movements.

What is RSI?

Developed by J. Welles Wilder, the RSI oscillates between 0 and 100. Its main purpose is to identify overbought and oversold conditions of an asset. Simply put, it helps us understand if a cryptocurrency or any other asset has been bought or sold "too much" in a short period, suggesting a possible price reversal or correction.

How to Read RSI?

The standard interpretation of the RSI is based on two key levels: 70 and 30.

Overbought > 70

When the RSI crosses above the 70 level, the asset is considered overbought. This suggests that the bullish trend may be nearing a point of exhaustion. For our tool, this is a potential sell signal.

Oversold < 30

When the RSI drops below the 30 level, the asset is considered oversold. This indicates that selling pressure might be excessive and the price could be close to a bounce. For our tool, this is a potential buy signal.

Customizing the RSI Period (7, 14, 21)

With RSI Easy Alert, you can choose between three different periods for the RSI calculation. The choice of period directly influences the indicator's responsiveness and suits different trading styles.

7-Period RSI (Fast)

Ideal for day trading and scalping. Being more sensitive to recent price changes, it generates more frequent signals. It is excellent for those operating on short timeframes (e.g., 1m, 5m, 15m) looking for rapid reactions.

14-Period RSI (Standard)

The default and most used period. It offers a good balance between responsiveness and reliability. It is the preferred choice for swing trading on timeframes like 1h, 4h, or daily, to follow broader trends.

21-Period RSI (Slow)

Perfect for long-term trend analysis. Being less sensitive to short-term fluctuations, it produces fewer signals, but the ones it generates are often more significant and indicate a more consolidated momentum.

Which Timeframe to Choose?

The effectiveness of the RSI largely depends on the market context:

  • Day Trading and Scalping: For short-term strategies, shorter timeframes like 1, 5, or 15 minutes are often preferred, combined with a fast RSI (e.g., 7 periods).
  • Swing Trading: For those operating on medium-long timeframes (1h, 4h, 1D), the standard 14-period RSI is generally more suitable for identifying broader trends.
  • Ranging Markets: The RSI is particularly reliable in ranging or "range-bound" markets, where overbought and oversold signals can more precisely indicate price reversal points.

How RSI Easy Alert Helps You

Manually checking the RSI on dozens of cryptocurrencies and different timeframes is a long and tedious task. Our tool automates this process for you.

When you create an alert, our system constantly monitors the RSI for the cryptocurrency, timeframe, and period you have chosen. As soon as the indicator enters the overbought (>70) or oversold (<30) zone, we send you an instant email notification, allowing you never to miss a trading opportunity again.

An Important Note: Why RSI Values May Differ?

You might notice that the RSI values calculated by our system, while very accurate, may slightly differ from those you see on other platforms like TradingView. This is a normal and expected situation, which does not indicate an error. Here are the main reasons:

  • 1. Historical Data Set ("Warm-up")
    To calculate the RSI, a set of historical data is required. Complex platforms load thousands of past candles to "warm up" the indicator. For efficiency, our system uses an optimized number of candles (currently 1000). A different starting point for the calculation can lead to small variations in the final value.
  • 2. Forming Candle vs. Closed Candle
    TradingView updates the RSI value in real-time with every price tick. Our alerts, to ensure maximum reliability, are based on the **closing** price of the last completed candle. It is therefore normal to see a difference if you compare the values halfway through an interval.
  • 3. Calculation Methodology (EMA vs Initial SMA)
    There are several minor variants of the RSI formula. Our system uses the PHP `trader` extension (based on the standard TA-Lib library), which calculates averages using an Exponential Moving Average (EMA). Other platforms might use a Simple Moving Average (SMA) for the initial calculation, then switch to the EMA. This initial difference, although minimal, can lead to discrepancies that are more noticeable in extreme market conditions.
  • 4. The Importance of Signal Consistency
    Even if the numerical value may vary by a few points (especially in extreme overbought/oversold zones), what matters is the **operational signal**. An RSI of 78 on our system and an RSI of 74 on TradingView both indicate the same thing: a strong overbought condition. Our system is designed to be **internally consistent**, ensuring that signals for crossing thresholds (70/30) or divergence occur at the correct moments according to the received data, providing you with timely and reliable informational advantage.

In summary: focus on the signal and the trend that the indicator shows you, rather than the exact match of the decimal value.