Introducing Oscillators on TokenSets

The ETH RSI 60/40 Crossover Set is now live on TokenSets!

Today, we’re excited to announce the launch of Oscillator indicators in the Trend Trading category on TokenSets! The first Set in this category is the ETH RSI 60/40 Crossover Set (ETHRSI6040) which automatically rebalances based on the Relative Strength Index (RSI) technical indicator.

Key Points:

The ETH RSI 60/40 Crossover Set is live on TokenSets!

ETHRSI6040 implements a crossover strategy on the ETH RSI.

RSI is an oscillator , a separate category of technical indicators from Moving Averages. Learn more about RSI here.

, a separate category of technical indicators from Moving Averages. Learn more about RSI here. ETHRSI6040 is currently below resistance at 60 and above support at 40 levels, and sitting in USDC.

Oscillators and the Relative Strength Index (RSI)

The Relative Strength Index or RSI is one of the most common indicators in Technical Analysis, or TA for short. In traditional stocks and cryptocurrencies like Bitcoin and Ethereum, TA utilizes existing data to make more informed decisions on when to buy and sell for traders. From traditional to cryptocurrency markets, most traders rely on specialized tools to perform these analyses, and the RSI is one of them.

More specifically, RSI is an oscillator, a separate category of TA indicators from Moving Averages. RSI calculates a band between 2 extreme values (0 to 100) to measure the magnitude of price movements as well as the speed of these movements.

The RSI traditionally measures the changes in a stock or crypto-asset’s price over 14 periods, which can be days, hours, or weeks. The RSI is calculated by using a formula that divides the average gain the price of an asset has had over 14 periods by the absolute value of average loss.

When momentum is rising, the RSI is higher (above 60) which indicates that an asset is being actively bought in the market. If momentum decreases, the RSI is lower (below 40) which is a sign that interest is waning and the selling pressure is increasing. Learn more about the RSI here.

How the ETHRSI6040 Set Works

The ETH RSI 60/40 Crossover Set attempts to capitalize on price velocity and momentum of past periods by using the Relative Strength Index (RSI).

On a high level, if the ETH daily RSI falls below support at 40 in an existing uptrend (price loses momentum), ETHRSI6040 rebalances ETH into cash (USDC) and if the ETH RSI breaks above resistance at 60 in an existing downtrend (price regains momentum), ETHRSI6040 rebalances back into ETH. ETHRSI6040 uses the daily RSI which means there is no confirmation period for rebalance signals.

The RSI updates once every 24 hours, so a rebalance is kicked off approximately the same time each day if conditions are satisfied. There is no confirmation period or minimum rebalance interval unlike moving average Sets.

How the ETHRSI6040 Set Performs

Disclaimer: The content below is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. The content below is provided for educational purposes only, and not indicative of future performance. None of the following should be interpreted as investment advice. The tools used below follow a predefined set of parameters and aren’t actively managed by Set Labs Inc.

This chart below compares the hypothetical performance of holding the ETHRSI6040 Set against holding ETH over the last 3 years, assuming a slippage rate of 1% during each rebalance. The model shows ETHRSI6040 would have outperformed over the given historical time period and underperformed in the bull market of 2017 and the last 6 months.

The chart below illustrates the ETH that would have been accumulated using the ETHRSI6040 Set following the same assumptions above.

It’s important to keep in mind the the charts above are based on a number of assumptions and are only meant for illustrative purposes. As always, past performance is not indicative of future performance.

These charts use generated ETH hourly data sourced from Gemini. In production, the ETHRSI6040 Set rebalances based on MakerDAO’s ETH price feed, which may output different results. If you’d like to play around with the data yourself (and tweak the parameters), feel free to fork the spreadsheet here.

Conclusion

Get started minting the ETHRSI6040 Set on TokenSets here!

If you have an idea for a strategy that you’d like to see on TokenSets, please don’t hesitate to reach out to us.

Developers interested in working with us can also reach out to our friendly team by emailing us at hello@setprotocol.com or by joining our Telegram chat.

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