Stoch RSI: The indicator you've always heard about but never really understood.

Anyone who trades in the crypto world has heard of RSI, but do you know it has an “evolutionary version”? Stochastic RSI is just the regular RSI with a little extra—combining it with the Stochastic indicator, making it easier for you to catch buy and sell points.

How to understand this indicator?

In simple terms, Stoch RSI is used to determine the overbought and oversold conditions:

• >80 = Overbought (may drop, consider selling)
• <20 = Oversold (may go up, consider buying)
• Medium Line 50 = Boundary Line

There will be two lines on the chart: the white line is called %K, and the red line is called %D (the 3-period moving average of %K).

How to use in practice?

1. Overbought and Oversold Trading The most basic strategy - buy when you see an oversold signal and sell when you see an overbought signal. But be careful of false signals, and it's best to confirm with other indicators.

2. Look for Divergence Prices have reached new highs, but the Stoch RSI has hit new lows? Or the other way around? This is called a divergence, which usually indicates that the trend is about to reverse. It is divided into bullish divergence and bearish divergence.

3. Linear Cross The %K line crossing the %D line generates a signal. Crossing in the oversold zone is a buying point, while crossing in the overbought zone is a selling point. This signal is most accurate in a consolidation market, while it can be deceptive in a trending market.

4. Bull and Bear Settings

• Bull: Price hits a new low, but Stoch RSI reaches a new high → Momentum is increasing, a rebound may occur.
• Bear: Price hits a new high, but Stoch RSI hits a new low → Selling pressure is increasing, beware of a drop.

Core Recommendations

✅ Do not use this indicator alone, as it is easy to get stuck. ✅ Combining trend lines, support and resistance, and other oscillation indicators yields better results. ✅ More reliable to use in a volatile market than in a trending market.

To put it simply, Stoch RSI is a good reference, but multiple confirmations from different angles are still necessary before trading.