RSI XAUUSD Trading Indicator Overbought and Oversold Levels
RSI xauusd indicator values of above 70 are considered to be overbought; xauusd traders consider points above the 70 level as market tops and good points for taking profits.
RSI xauusd indicator values of below 30 are considered to be oversold; xauusd traders consider points below the 30 level as market bottoms and good points for taking profits.
These overbought and oversold xauusd levels should be confirmed by RSI center line crossovers xauusd signals. If these regions give a market top or bottom, this xauusd signal should be confirmed with RSI center line crossover xauusd signal. This is because these overbought and oversold levels are prone to giving whipsaws in the gold market.
In the xauusd example shown below, when the RSI hit 70, it showed that the xauusd was overbought, and this could be considered a trading signal that the xauusd trend could reverse.
The xauusd chart then reversed the xauusd trend after a short while and started to move downwards, until it got to the oversold levels. This was considered a xauusd market bottom after which the gold chart started to move upwards again.
Overbought and Oversold Levels - RSI XAUUSD Strategies
Over Extended Overbought and Oversold Levels
When the xauusd market is trending strongly upwards or downwards the RSI xauusd indicator will stay at these overbought and oversold levels for a long time. When this happens these overbought and oversold regions cannot be used as xauusd market tops and xauusd market bottoms because the RSI xauusd indicator will stay at these levels for an extended period of time. This is the reason why we say that the overbought and oversold regions are prone to xauusd whipsaws and it is best to confirm these xauusd signals using RSI center-line crossover strategy.
Over Extended Overbought and Oversold Levels - RSI XAUUSD Trading Indicator Strategy