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RSI XAUUSD Technical Analysis and RSI XAUUSD Signals

Developed by J. Welles Wilder, described in the book “New Concepts in Technical Trading Systems”.


Relative Strength Index is the most popular indicator and it is a momentum oscillator and a xauusd trend following indicator. RSI compares a trading gold price magnitude of the recent gold price gains against its magnitude of recent losses gold price losses and plots this data on a scale of values that ranges between 0-100.


Relative Strength Index measures the momentum of a xauusd instrument; values above 50 signify bullish momentum while values below 50 center-line signify bearish momentum.


RSI Technical XAUUSD Indicator



  • RSI is drawn as a green line

  • Horizontal dashed lines are drawn to identifying overbought and oversold levels are i.e. 70/30 levels respectively.



XAUUSD Technical Analysis and Generating XAUUSD Signals


There are several methods used to trade, these are:


50-level Crossover Signals


  • Buy signal - when the indicator crosses above 50 a buy/bullish signal is given.

  • Sell XAUUSD Signal - when the indicator crosses below 50 a sell/bearish signal is given.


RSI Technical Gold Indicator Buy Sell XAUUSD Signals


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RSI Gold Chart Patterns

Traders can draw xauusd trend lines and map out xauusd chart patterns on the RSI indicator. The Relative Strength Index often forms xauusd chart patterns such as head and shoulders xauusd chart pattern which might not have formed clearly on the gold price chart.


Trading Support/Resistance Breakouts

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

Support and Resistance Breakout

Swing Failure - Support and Resistance Breakout



Overbought/Oversold Conditions


  • Overbought- levels above 80

  • Oversold- levels below 20



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


Divergence XAUUSD Setups

Divergence trading is one of the technical analysis method used to trade reversals of the gold price trends. There are 4 types of divergences that can be traded with this indicator covered in the divergence tutorial on this website.

 

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