RSI ratio L/S is an indicator currently available to observer or higher TTP tiers.
It offers a visual way to explore not only the ratio of longs and shorts on Bitfimex with positions in the futures market but also the ratio of them against the strength of the BTC price.
The white line in the oscillator is the RSI of BTC. And the green to red coloured cloud around it represents the ratio of longs and shorts.
You can see how many longs or shorts there are in the market relative to the current strength of the price.
Example: if BTC price is oversold its RSI would go somewhere above below 30. Then if the colour of the L/S ratio turned into green it would mean that many longs are entering the market relative to the number of shorts which should increase the chances of a movement to the upside.
Signals
We have added 3 separated signals to discord in the 4 hour timeframe.
- Strong positive gap. This corresponds to the green vertical line in the chart above. As you can see we have had only 4 of them in since early 2021. One at the bottom of May to July mini-bear market. And almost one each time there’s a major dump and BTC either starts a relief rally or when BTC finds a new local bottom in preparation for one or more months of sideways movement.
- Strong negative gap. This corresponds with the strong red vertical line in the chart above. Interesting to note that this matches the two past ATH: in April 2021 and then later in November 2021. Both of them excellent exits. You should also note that there are plenty of false positives when the bull market is gaining strong upwards momentum. During the parabolic increase early 2021. It’s better to use these signals in confluence with other indicators showing that we are due for correction as a confirmation, for example: Hive, futures rate, etc.
- Too many longs BTC overbought. This one has had a great performance during the current bear market. BTC oversold with too many longs in the 4h timeframe in bear market has had a 100% accuracy in forecasting dumps. The signal is a yellow vertical line.
You can see these signals via discord or you can gain access to the actual Pine Script.