What if everything you’ve been told about “oversold” and “overbought” was statistically backwards?
Most traders learn RSI as a simple reversal tool: buy when it’s oversold, sell when it’s overbought. But when you actually test RSI behavior across market structure, volatility conditions, volume environments, and forward‑return distributions, a very different picture emerges. The 12 Laws of RSI (BTC Edition) were created to correct the most common misunderstandings traders have about the Relative Strength Index. These laws rely on statistical findings (Due to be released soon) that summarizes the truth about the behavioral characteristics of how this indicator performs on the bitcoin daily chart with a 10-day horizon. Instead of treating RSI as a simple “overbought/oversold” reversal tool, these laws reveal how RSI actually behaves in bull markets, bear markets, momentum phases, and periods of weakness. If you want to use RSI intelligently, these 12 laws are the foundation:
Law 1: RSI is a Continuation Indicator in Bull Markets, not a Reversal Indicator.
• In a bullish market structure (price > MA50 > MA200), treat RSI > 70 as a momentum confirmation, not a sell signal.
• When the market is going up, and RSI is high, do not bet against it, it means that the move is strong and its going to keep going for at least 5 days.
• If the market is strongly moving upward, and RSI is in a strong overbought position, that is an indication of double strength, not a warning sign.
Law 2: RSI < 30 is not a buy signal in bear markets.
• Do not aim for long setups with an RSI under 30 in downtrends; treat the oversold condition if the market is bearish as a sign of continuation in the negative direction.
Law 3: RSI > 70 Outperforms RSI < 30 Over 10-day horizons.
• RSI>70 can be used as a trend-strength filter for continuation setups
• This is the first place where RSI behavior produces a real, measurable, statistically significant edge.
Law 4: RSI Behavior is Asymmetric, meaning Overbought does NOT equal oversold conditionally.
• RSI > 70 has stronger, more consistent continuation in bull markets
• RSI < 30 has weaker, inconsistent bounces in bear markets
• This breaks the concept of the “buy when oversold” and “sell when overbought”
Law 5: Oversold means sellers are in control, not that an immediate reversal is incoming.
• Sellers have been beating up the price for days
• This is NOT a buy signal
• RSI < 30 means the price is weak, not a discount alert.
Law 6: Oversold moves are very fast and hard, and are not statistically random.
• Bearish moves are very sharp and aggressive, and usually steep negative movements fall with force
• Sharp drops are going to often keep going rather than stop
• Expect volatility and instability, not a clean bounce
Law 7: Oversold does not prove that positive returns are within a 10-day horizon.
This is because of how violent price can move in an oversold territory.
Law 8: Oversold price reversals are weak, inconsistent, and mostly random.
• RSI values below 30 do not indicate a “bottom is in”
Law 9: Buying the “dip” just because the RSI indicator indicates a bottom is statistically a bad idea.
• Never assume that oversold means “Safe to buy”, you should always treat values below 30 as a signal to expect more moves to the downside.
Law 10: It’s not smart to pair volatility indicators to see if you can get a statistical edge with even the best oversold setups with the RSI.
• High volatility oversold, and low volatility oversold produce statistically indistinguishable forward returns, and volatility does not make RSI < 30 better or worse in any reliable way.
Law 11: Trend Indicators with low RSI filters do not offer a “fix”.
• Strong downtrends do not make RSI < 30 reversals any stronger
• All the “Oversold works best after a big dump” narratives fail statistically.
• Avoid rules like “buy RSI<30 after a 10-day crash.”
Law 12: Prior uptrends do not offer an extra edge
• High RSI + Prior uptrends do not equal major bull runs are about to occur at all, that’s why you should use good risk management and position sizing, and only sacrifice what you can afford to lose
The 12 Laws of RSI make one thing clear: RSI is not a reversal tool; it is a context‑dependent continuation tool.
High RSI in bull markets signals strength, not danger.
Low RSI in bear markets signals weakness, not opportunity.
Oversold reversals are unreliable, inconsistent, and cannot be repaired with volatility indicators, trend indicators, or deep‑decline indicators.
The only meaningful edge comes from understanding RSI’s asymmetry: RSI > 70 has more continuation power than RSI < 30 has reversal power.
If you want to use RSI effectively, you must stop treating it as a bottom‑finder and start treating it as a market structure-aware momentum gauge.