My Fidelity Investments brokerage account has been doing some weird gymnastics. With the SEC chief, Gary Gensler being told he's fired on day one of the new Trump Administration, change is coming. Investments in both the stock market and crypto markets will become unrestricted. Have you made some changes to your own crypto exchanges like I did with SimpleSwap?
I needed to learn a few new terms like the one used below for stocks and crypto.
What is "RSI cooling off" mean?
"RSI cooling off" in the context of trading and technical analysis, particularly when referring to the Relative Strength Index (RSI), typically means the following:
Return to Neutral Zone: The RSI is an oscillator that ranges from 0 to 100. When it's said to be "cooling off," it often implies that the RSI value, which might have been in an overbought (>70) or oversold (<30) territory, is moving back towards a more neutral level, often considered around 50 or within the range of 30 to 70. This movement suggests that the price momentum of the asset is stabilizing or normalizing after a period of extreme buying or selling pressure.
Momentum Reset: If the RSI has been at very high levels indicating overbought conditions, or very low levels indicating oversold conditions, a "cooling off" period would indicate that the momentum is decreasing. This could mean the asset's price might soon experience a correction or a trend continuation after the momentum has rebalanced.
Price Correction Signal: Traders might interpret an RSI cooling off from overbought levels as a signal that the asset's price might decrease, as the high buying pressure that pushed the RSI into overbought territory is diminishing. Conversely, if the RSI cools off from oversold levels, it might suggest that selling pressure is reducing, potentially leading to a price increase.
Trend Confirmation:
In Uptrends: If the RSI cools off but remains above a certain level (like above 40), it might indicate the continuation of the uptrend after a brief pause or correction.
In Downtrends: If the RSI cools off but stays below another level (like below 60), it could confirm the downtrend's persistence after a small rally or consolidation.
Hidden Strength or Weakness: As mentioned in some X posts, if the RSI cools off faster than the price, it might indicate hidden strength in an uptrend or hidden weakness in a downtrend. This could suggest that the underlying trend might be stronger than what the price action currently shows.
The term "cooling off" does not imply a specific strategy but describes the RSI's movement away from extreme values, which traders use to gauge potential shifts in momentum or trend continuation. Remember, while RSI can provide insights, it should be used in conjunction with other indicators and analysis methods for more robust trading decisions.
