Bitcoin price has been in a tight range since the summer. Range can be successfully traded using RSI.

Bitcoin price has been in a tight range since the summer. The range can be successfully traded using RSI.

Bitcoin investors, especially Hodler, have had a rough time over the summer months. Literally, the price of Bitcoin has gone nowhere.

Sure enough, the rally in the early months of the year more than compensates investors who hold cryptocurrency in the long term. But similar (or higher) profits can be made by predicting short-term market movements.

This is true if the trader is able to identify when the market is strengthening, as was the case in the summer months. The easiest way to trade the market at this point is to use an oscillator and trade the overbought and oversold levels.

The most famous oscillator is the RSI (Relative Strength Index), and its interpretation is straightforward. More precisely, whenever the oscillator value is above 70, the market is said to be overbought and should decline. Conversely, when the RSI reaches values ​​below 70, the market is oversold, and the price should rise.

Such a simple strategy works when the market is in a range. However, when a trend is observed, it can be destructive to the trading account.

So the key is to identify the range. Once it is known, it works as smoothly as possible – just look at how it works on Bitcoin in the summer months.

Bitcoin trading when the price is in range

Since June, RSI has provided the perfect signal to trade Bitcoin. As shown in the chart below, it worked flawlessly – and still does.

Bitcoin Chart by TradingView

If the range continues, it will probably still work.

However, once the range is over, the market can stay in overbought and oversold territory longer than a trader can stay liquid. Therefore, if anyone speculates on such regions, it should be done in small areas and strict financial management rules.