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RSI Indicator Over-bought and Oversold Levels

RSI readings over 70 mean overbought conditions. Traders see levels above 70 as peaks to sell and take gains.

When the RSI drops below 30, traders see that as oversold. Points under 30 are considered market bottoms and good spots to take profit.

Check overbought and oversold spots with RSI centerline crosses. These zones might mark tops or bottoms, but confirm with the crossover. Alone, they often lead to fake moves in the market.

In the example shown below, when the RSI reached 70, it indicated that the xauusd was overbought, which could be interpreted as a sign that a trend reversal may occur.

After a short time, the chart changed direction and started to go down until it reached the over-sold levels. People thought this was the lowest point, and then the trading chart started to move up again.

RSI XAUUSD Strategies - RSI Overbought and Oversold Levels Strategies

Overbought and Oversold Levels - RSI XAUUSD Methods

Over Extended Overbought & Oversold Levels

Should the market exhibit persistent, strong movement either upwards or downwards, the RSI indicator can remain fixed in those over-bought and over-sold territories for extended timeframes. When this occurs, these overbought and oversold boundaries cannot be reliably used as markers for market tops or bottoms, as the RSI indicator will hold these technical positions for an extended duration. This circumstance underlies why overbought and over-sold areas are prone to XAUUSD whipsaw signals, emphasizing the benefit of confirming such signals using the RSI center-line crossover methodology.

RSI Strategies for Overbought and Oversold - Read RSI Indicator Levels

Over Extended Overbought and Oversold Levels - RSI Indicator Strategy

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