Relative Strength Index Metals Trading Analysis & RSI Metals Trade Signals

Created by J. Welles Wilder, described in the book "New Concepts in Technical Trading Systems".

RSI is the most popular indicator & it is a momentum oscillator and a metals trend following indicator. RSI compares a metals price magnitude of the recent metals price gains against its magnitude of recent losses metals price losses and draws this data on a scale of values that ranges between 0-100.

RSI measures the momentum of metals; values above 50 signify bullish momentum while values below 50 center-line signify bearish momentum.

• RSI is drawn as a green line
• Horizontal dashed lines are drawn to spotting over bought & oversold levels are i.e. 70/30 levels respectively.

Metal Analysis & How to Generate Trading Signals

There are several techniques used to trade, these are:

50-level Crossover Signals

• Buy signal - when the indicator crosses above the 50 a buy/bullish signal is given.
• Sell Metals Signal - when the indicator crosses below 50 a sell/bearish signal is given.

RSI Metals Chart Patterns

Traders can draw metals trend lines & map out metal chart patterns on the RSI indicator. The RSI often forms metal patterns such as head & shoulders metal pattern which might not have formed clearly on the metals price chart.

Metal Trading Support/Resistance Break outs

RSI is a leading indicator & can be used to predict Support/Resistance Breakouts before metals price breaks its support/resistance level. RSI uses the swing failure signal to predict when metals price is about to break support and resistance levels.

Swing Failure - Support and Resistance Breakout

Overbought/Oversold Conditions on Technical Indicator

• Overbought- levels above 80
• Oversold- levels below 20

These levels can be used to generate metals signals such as when RSI turns up from below 20 after oversold, buy & sell when RSI crosses to below 80 after overbought, sell. These signals are not suitable for trading Metals because they are prone to a lot of whipsaws.

Divergence Metal Trading Setups

Divergence trading is one of the technical analysis method used to trade reversals of the metals price trends. There are four types of divergences that can be traded with this indicator covered in the divergence tutorial on this web site.