How to identify if a cryptocurrency is overbought or oversold 🔍

After losing money several times by buying at highs and selling at lows, I learned the hard way to detect when a coin is overbought or oversold. Let's get to what really matters.

Overbought and oversold: the reality

• Overbought: The price has risen too quickly and everyone is euphoric. It's when you see your brother-in-law who has never invested talking about cryptos. Be careful, it is usually a sign of a drop.

• Oversold: The coin has plummeted, no one wants to know anything about it and everyone is selling in panic. Just when I think "I'm ruined," it tends to be a good time to buy out.

Tools I use ( that really work )

1. RSI (Relative Strength Index)

My favorite for its simplicity:

• Above 70: too much greed, likely drop
• Below 30: extreme fear, possible rebound

2. MACD

I use it to confirm trends:

• When the MACD line is far above the signal, prices are too stretched.
• If it is far below, there is too much pessimism in the market

3. Bollinger Bands

They saved me many times:

• Price touching the upper band: too much euphoria
• Price at the lower band: unjustified panic

What nobody tells you

Market "news" and sentiment are often manipulated. When I see exaggerated headlines about a coin, it's usually the exact moment to do the opposite.

Don't rely on a single tool. I made that mistake so many times. Combine them and observe patterns.

My final advice

The crypto market is unpredictable and wild. Don't do what the majority does. When everyone is buying like crazy, I prepare to sell. When everyone is selling in panic, I start to accumulate.

This approach is not foolproof, but it has helped me survive several market cycles without going broke.

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Notice: This is my personal experience, not financial advice. Do your own research.