StochRSI combines RSI and Stochastic to create a hyper-sensitive indicator that detects overbought/oversold conditions with greater precision, especially in volatile markets like crypto. How is it used?
- Overbought/oversold: Buy when StochRSI crosses above 20; sell when it crosses below 80.
- Crossovers: StochRSI crossing above its signal line is bullish; crossing below is bearish.
- Divergence: Divergence with price can signal reversals.
- Calculate RSI (typically 14-period).
- Apply the Stochastic formula to RSI: