RSI XAUUSD Strategies
- RSI Overbought and Oversold Levels
- Relative Strength Index Divergence Setups
- RSI Classic Bullish and Bearish Divergence
- RSI Hidden Bullish and Bearish Divergence
- Swing Failure Strategy
- RSI Gold Chart Patterns XAUUSD Trend Lines
- RSI Summary
Relative Strength Index Indicator XAUUSD Strategy
Relative Strength Index or RSI is one of the most popular xauusd indicator used in xauusd trading. It is an oscillator xauusd indicator which oscillates between 0 -100. This a xauusd trend following xauusd indicator. It indicates the strength of the xauusd trend, values above 50 indicate a bullish xauusd trend while values below 50 indicate bearish XAUUSD trend.
RSI XAUUSD Indicator Measures Momentum of a XAUUSD Trend.
The center-line for the RSI is 50 xauusd indicator, crossover of the center-line indicate shifts from bullish to bearish xauusd trend and vice versa.
Above 50, the buyers have greater momentum than the sellers and gold price on the gold chart will keep going up as long as this RSI xauusd indicator stays above 50.
Below 50, the sellers have greater momentum than the buyers and gold price on the gold chart will keep going downwards as long as RSI xauusd indicator stays below 50.
RSI Gold Indicator - How to Trade XAUUSD Trading with RSI XAUUSD Indicator
In the xauusd example above, when the xauusd indicator is below 50, the gold price kept moving in a downward gold trend. The gold price continues to move down as long as RSI indicator was below 50. When the RSI xauusd indicator moved above 50 it showed that the momentum had changed from sell to buy and that the downward xauusd trend had ended.
When the RSI xauusd indicator moved to above 50 the gold price started to move upwards and the xauusd trend changed from bearish to bullish. The chart gold price continued to move upwards and the RSI indicator remained above 50 afterwards.
From the xauusd example above, when the xauusd trend was bullish sometimes the RSI would turn downwards but it would not go below 50, this shows that these temporary moves are just retracements because during all these time the gold price xauusd trend was generally upwards. As long as RSI indicator does not move to below 50 the current xauusd trend remains intact. This is the reason the 50 center line mark is used to demarcate the signal between bullish and bearish xauusd signals.
The RSI xauusd indicator uses 14 day period as the default period, this is the period recommended by J Welles Wilders when he introduced it. Other common periods used by XAUUSD traders are the 9 and 25 day moving average.
The RSI indicator period used depends on the gold chart time frame you are using to trade, if you are using day xauusd chart time frame the 14 period will represent 14 days, while if you use 1 hour xauusd chart time frame the 14 period will represent 14 hours. For our xauusd example we shall use 14 day moving average, but for your trading you can substitute the day period with the chart time frame you are xauusd with.
To Calculate RSI XAUUSD Indicator:
- The number of days that a xauusd market is up is compared to the number of days that the xauusd market is down in a given time period.
- The numerator in the basic formula is an average of all the xauusd sessions that finished with an upward gold price change.
- The denominator is an average of all the down xauusd sessions closes for that period.
- The average for the down days are calculated as absolute numbers.
- The Initial RSI is then turned into an oscillator.
Sometimes very large up or down movement in gold price in a single xauusd session gold price period may skew the calculation of the RSI average and produce a false xauusd signal - whipsaw signal - in the form of a spike.
RSI Center-line: The center-line for this xauusd indicator is 50. A value above 50 implies that the xauusd market xauusd trend is in a bullish phase as average gains are greater than average losses. Values below 50 indicate a bearish phase in the xauusd market prices are generally closing lower than where they opened.
Overbought and Oversold Levels: Wilder set the RSI overbought and oversold levels at which the xauusd market moves are overextended at 70 and 30.