Hello to all my friends from steemit, this week we will cover even more the subject of technical analysis, this week we will touch on the RSI and how to do this analysis and what tools we have to carry out this type of analysis, all this as part of the fulfillment of the task from the crypto academy teacher @kouba01

The RSI is a technical analysis which shows us signs of behavior, its analysis leads us to a possible prediction of future movements thanks to previously repeated patterns. This type of analysis is used both in cryptocurrency trading and in traditional operations on the stock market.

This RSI was developed in the 70s so that stockbrokers of those times could analyze the behavior of a selected asset, already with the new emerging technologies and the birth of cryptocurrencies adapts to these demands and now anyone with simple knowledge have access to this technical indicator, something that did not happen before since only stockbrokers could have access to that information.

This measures the changes in the price of an asset during 14 periods, if a daily measure is sought the measure will be performed every 14 days, if it is for 1 hour the measure will be performed every 14 hours and if it is every minute, then it will reflect a measure every 14 minutes, then the formula that she executes is the following, she will look for the average of gains captured in that period of time and will divide it by the average that she has endured and the result will reflect it on a scale of strength from 0 to 100.

When this scale from 0 to 100 increases it means that the asset is being highly bought, on the contrary if it decreases it means that people are exiting the asset and that it is clearly in a downward trend.

All these time periods can be modified to this day since there are digital tools that facilitate these technical analyzes, so it is very common to see 7-day periods and 5-minute periods and 1-minute periods, in the world of cryptocurrencies. It is the standard used in all technical analysis charts.

Personally, I believe that since the RSI analysis is an analysis of moments, and the world of cryptocurrencies is governed by moments, good moments and bad moments, although the markets are unpredictable most of these moments if they are, since when there is calm or stability, the markets follow a pattern that always repeats itself, whether in an uptrend or a downtrend.

Another aspect to keep in mind is that this analysis has been used for a long time, which supports its usability to this day, thanks to its easy understanding and advantages that it can offer you when trading. That is why I recommend studying the principles of this Technical Analysis to get the most out of it.

How is the RSI indicator set on the chart and what does the length parameter mean? Why is it equal to 14 by default? Can we change it?

I personally use the Binance exchange, to configure this indicator we must follow the following steps.

As I mentioned before, this number is used by default because there are 14 periods to calculate between the average of the sales and the average of the support, this was thought this way by its creator welles wilder since it was the formula that worked for him and is the most effective until the moment.

These overbought and oversold signals are peaks generated by one or another action, for example overbought causes the price to skyrocket in such a way that there is no one available to buy at such a high price that it causes the price to fall suddenly, the same happens with oversold but in reverse.

Understanding these principles we can analyze that there is an unnatural movement effected by the game of supply and demand. where there is no price equilibrium generating exaggerated price changes.

These signals are evidenced in the lines marked on the graph where 70 or more indicates that there is an over-purchase of assets and that of 30 an over-sale.

Let's see all this in the image.

There are indicators that help us to distinguish these signals, and they are divergences, since when a market opts for a specific trend it is easy to detect such divergences and therefore we can predict future signals in the market. This is clearer to see with examples.

RSI analysis is a tool used for years by asset market analysts, now it has been implemented in the cryptocurrency markets, personally I did not like the market analysis because I always thought that the market did not care about the analysis, it only exploded when I wanted to and that's it, but I have changed my mind this tool is very useful to learn about the changes to futures in the market and I finally see a utility in technical analysis.