If the classic RSI is a marathon runner who tires slowly, StochRSI is a sprinter who does 100-meter sprints every 5 minutes. It moves quickly, gets angry quickly, and if you're not careful, it makes you jump into the market far too early.
I am #NexusBull and today we are talking about how we 'tame' the most volatile indicator in crypto: #STOCHRSI
What exactly is StochRSI?
Don't be fooled by the complicated name. StochRSI is, basically, an RSI applied to another RSI. In other words, it measures how 'stretched' the other indicator is already.
If the RSI tells you that the market is tired, StochRSI tells you exactly at what second it started to settle on the bench to rest.
Zone 80-100: It’s full of energy, the price is 'at maximum'. Often it’s time to stay aside.
Zone 0-20: It’s on the ground, drained of energy. This is the zone where we, the Spot hunters, begin to prepare our finger on the buy button.
MAStochRSI – The necessary calming agent
The problem with StochRSI is that it is too volatile. It creates broken lines and gives false signals often. This is where MAStochRSI (Moving Average of StochRSI) comes in.
Imagine that StochRSI is a child jumping all around the house, and MAStochRSI is his mother slowly walking behind him.
The secret of NexusBull: I don’t just look at how the volatile line jumps. I look at the intersection. When the fast line crosses above the slow one in the lower zone (below 20), it’s as if the market whispers to me: 'Now is the time, the decline is over!'.
How do we use it on Spot so we don't 'burn' ourselves?
On Spot, we don’t have the stress of liquidation, but we have the stress of buying and seeing the price drop another 10%. StochRSI helps us avoid that:
Never buy when StochRSI is at 90. Even if it seems like the price is still rising, the probability of a correction following is huge.
Wait for the 'muffing' from the bottom. When you see both lines in the 0-10 zone and starting to curve up, that’s the 'belly' of the whale. That’s where we enter.
Confirmation with the high RSI. The best signal? When the classic RSI says we are on sale, and StochRSI has just turned back from zero. That’s where the 'golden' entry is.
My conclusion? StochRSI is like an earthquake alert system. It tells you that movement is coming before it is visible on the price. But beware: it is so sensitive that sometimes it sees earthquakes where there is just a truck passing on the street. Always use it together with moving averages (MA) for confirmation!
What do you use for 'timing'? Do you have the patience to wait for StochRSI to be below 20 or do you enter 'on sentiment'? 👇