Imagine you’re sitting at your desk, surrounded by screens that light up with the latest cryptocurrency trends. Prices for Bitcoin and Ethereum are going through the roof. Everywhere, there are stories about people who got rich overnight.
Your friends are making money, and you’re missing out. One article shouts, “Buy, buy, buy!” while another screams, “Sell, sell, sell!” A friend then asks, “Did you see Ethereum today? It just moved 10%… I’m buying, are you?” The excitement and panic are like a thick fog of emotion around you.
Welcome to the world of investing FOMO – where the “fear of missing out” can lead to quick decisions and big mistakes.
But there’s a better way to deal with all this craziness…
Turning Fear Into Smart Choices
Today I’ll show you how to use the Relative Strength Index (RSI) to help you make more intelligent investment choices. With the RSI, you can turn that “fear of missing out” into a strategy to find success.
The RSI is like a compass in the stormy seas of cryptocurrencies and the stock market. It helps you know when to be careful and when there’s a chance for big wins. It’s not just about avoiding losing money; it’s about setting yourself up for making more money by making wise choices.
RSI and Ethereum: A Real Example
Let’s look at Ethereum’s significant rise starting in 2022. If you check out the daily chart, the price shot up in April, and RSI exceeded 70. I’ve marked these times with a red circle on the chart, showing when Ethereum’s RSI was over 70 and overbought. Investors who saw this and sold at high prices didn’t lose money when the price dropped later.
This is how RSI works: it helps you stay calm and make good choices when everyone else is going wild.
Ethereum repeated the pattern in August 2021, January 2023, and November 2023. Each time its RSI crossed 70, it was time to consider a step back and avoid the big drops that happened later. This shows how RSI can guide you, even when the market is bubbling with FOMO.
RSI Tells You When to Buy
Now, look at the green circles on the chart. These circles show when the RSI went below 30, a sign I often use to enter trades. Following these signs, you can see a pattern of making money (green arrows) and saving headaches (red arrows) with Ethereum.
On the right side of the chart, you can see it falling… my prediction is Ethereum will drop below 30 in the next few weeks, signaling another time to buy.
As discussed last week, Ethereum has some great features that make it unique, like tokenization. We said it is a cryptocurrency you need to own. Combine a desire to buy Ethereum with this RSI signal to spot specific times for buying and selling, and you have a great way to trade the cryptocurrency. Specifically, you have a signal to give you an entry price for Ethereum in the coming weeks.
Free Trading Resources
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A Strategy for Smart Investing
This article doesn’t just give you a tip; it gives you a whole strategy. It’s about finding the best times to buy and sell without needing a lot of data or hard work.
Using RSI, you can turn the confusion of FOMO into a planned approach for investing in crypto. It’s all about making the market work for you and turning fear into fortune with intelligent, data-driven decisions.
Leveraging Data for You,
Brad Hoppmann
Analyst, Market Minute