RSI Gold Indicator Overbought and Oversold Levels
RSI values of above 70 are considered and regarded to be over bought: traders consider levels above the 70 level as market tops & good points for booking profits.
RSI values of below 30 are considered and regarded to be over sold: traders consider levels below the 30 level mark as market bottoms and good points for booking profits.
These overbought and oversold gold trading levels should be confirmed by RSI center line crossovers signals. If these regions give a market top or bottom, this gold signal should be confirmed with RSI center line crossover signal. This is because these overbought and over-sold levels are prone to giving fake outs in the market.
In the illustration depicted and demonstrated below, when the RSI hit 70, it showed that the trading was overbought, & this could be considered and interpreted as a signal that the trend could reverse.
The chart then reversed the market trend after a short while & started to move downwards, until it got to the over-sold levels. This was considered a market bottom after which the chart started to move upwards again.
Over-bought & Oversold Levels - RSI Gold Strategies
Over Extended Overbought & Oversold Levels
When the market is trending strongly upward or downwards the RSI will stay at these over-bought and oversold levels for a long time. When this happens these overbought and oversold regions can't be used as gold market tops and gold market bottoms because the RSI will stay at these technical levels for an extended time period. This is the explanation why we say that the overbought and oversold regions are prone to whipsaws & it is best to confirm these trading signals using RSI center line cross over strategy method.
Over Extended Overbought & Oversold Levels - RSI Gold Indicator Strategy
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