Guys, hello! 👋 We already know that the RSI is the market's thermometer. But which thermometer to take? The standard one for 14 periods, or the super-fast one for 6? Today, using the real example of the FOLKS coin, I will show you why you need to look at both!
🔋 RSI: Like a Mobile Phone
To understand the RSI (Relative Strength Index), imagine that it is the battery of your smartphone:
RSI below 20 (Oversold 🟢): Time to charge! The coin is oversold and is looking for energy to bounce.
RSI above 80 (Overbought 🔴): Urgently unplug! The coin is overheated and it's time to cool down (Correction).
Important: Like a phone, RSI at 20 can give a thought of a bounce, but it can easily drop to 15, 10, or even 4! Don't wait for a perfect 30 — wait for a trend break.
🌡️ RSI: Market Thermometer (Difference between 6 and 14)
RSI shows the strength of the movement. The difference in periods (6 or 14 candles) is critical:
RSI 14 (Standard): Slow, stable. Provides reliable but delayed signals.
RSI 6 (Fast): Super sensitive! Reacts instantly, perfect for day trading, but gives a lot of "noise" (false signals).
💡 FOLKS Case: When 98 is still not the end!
Imagine the situation with the FOLKS coin on a 15-minute chart:
Beginning of overheating. At a price of 25.96 we see that RSI 6 jumped to 96.6!
Teapot Thought: "96.6! This is the ceiling! The mobile will explode!" You open a short.
Don't worry, I am a teapot sometimes too, and if you opened a short, you are not alone, but I was also tempted by the liquidation map, liquidation zones have been crossed, RSI is high on both the hour and 15 minutes. It's the right time to open a short, but then I see:
RSI is rising, Price is rising! The next 15-minute candle: RSI 6 is already 97.7! Then 98.15! The price continues to rise, your shorts are burning, and mine closed at a stop loss of -5%❗
First dump. The first red candle appears, and RSI 6 instantly drops to 80.84! It cooled down quickly, but the price did not crash.
Final surge. The next candle is green again, and RSI 6 returns to 87!
Fall! Only after this did we see two strong red candles and a drop of almost 20%.
🤔 What's the catch?
When RSI 6 shows 96.6-98.15, it indicates a super impulse, but does not guarantee a reversal. Whales use this impulse to shake out early shorters.
📉 The Most Important Conclusion: Target Level
The most frightening thing for those who entered short at a price of 25.00 or earlier is that even after a 20% drop, we need to fall at least another 10% to return to the price from which this wild rise began.
💡 Trader Lifehack:
RSI 6: Use it for ultra-early warnings and to see when the momentum will run out (like dropping to 80.84).
RSI 14 (Standard): It should have shown Divergence — this is the strongest reversal signal.
Rule 90: When RSI 6 or RSI 14 goes above 90, this is not a signal to short, it is a signal of danger. Wait for the RSI to start falling (breaking the momentum) before opening a trade.
Don't let yourself be deceived by instant overheating! Whales love to push the price to absurdity before starting to dump.
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