RSI Commodities Technical Indicator Overbought and Oversold Levels

RSI commodity indicator values of above 70 are considered to be overbought; commodity traders consider points above the 70 level as market tops and good points for taking profits.

RSI commodity indicator values of below 30 are considered to be oversold; commodity traders consider points below the 30 level as market bottoms and good points for taking profits.

These overbought and oversold commodity levels should be confirmed by RSI center line crossovers commodity signals. If these regions give a market top or bottom, this commodity signal should be confirmed with RSI center line crossover commodity signal. This is because these overbought and oversold levels are prone to giving whipsaws in the commodities market.

In the commodity example illustrated and explained below, when the RSI hit 70, it showed that the commodity was overbought, and this could be considered a trading signal that the commodity trend could reverse.

The commodity chart then reversed the commodity trend after a short while and started to move downwards, until it got to the oversold levels. This was considered a commodity market bottom after which the commodities chart started to move upwards again.

Overbought and Oversold Levels - RSI Commodity Trading Strategies

Over Extended Overbought and Oversold Levels

When the commodity market is trending strongly upwards or downwards the RSI commodity 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 commodity market tops and commodity market bottoms because the RSI commodity 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 commodity whipsaws and it is best to confirm these commodity signals using RSI center-line crossover strategy.

Over Extended Overbought and Oversold Levels - RSI Commodities Trading Indicator Strategy