RSI Gold Trading Strategies

• RSI Overbought and Oversold Levels
• RSI Divergence Setups
• RSI Classic Bullish & Bearish Divergence
• RSI Hidden Bullish & Bearish Divergence
• Swing Failure Strategy
• RSI XAUUSD Chart Patterns Gold Trend Lines
• RSI Summary

RSI Indicator Strategy

RSI or RSI is one of the most popular gold indicator used in gold trading. It is an oscillator gold indicator which oscillates between 0 -100. This a gold trend following gold indicator. It indicates the strength of the gold trend, values above 50 indicate a bullish gold trend while values below 50 indicate bearish Gold trend.

RSI XAUUSD Indicator Measures Momentum of a XAUUSD Trend.

The center-line for the RSI is 50 gold indicator, crossover of the center-line indicate shifts from bullish to bearish gold trend and vice versa.

Above 50, the buyers have greater momentum than the sellers and xauusd price on the gold chart will keep going up as long as this RSI indicator stays above 50.

Below 50, the sellers have greater momentum than the buyers and xauusd price on the gold chart will keep going downwards as long as RSI indicator stays below 50.

RSI XAUUSD Indicator - How to Trade Gold with RSI Technical Indicator

In the xauusd trading example above, when the gold indicator is below 50, the xauusd price kept moving in a downward trend. The xauusd price continues to move down as long as RSI indicator was below 50. When the RSI indicator moved above 50 it showed that the momentum had changed from sell to buy and that the downward gold trend had ended.

When the RSI indicator moved to above 50 the xauusd price started to move upwards and the gold trend changed from bearish to bullish. The gold chart price continued to move upwards and the RSI indicator remained above 50 afterwards.

From the xauusd trading example above, when the gold 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 xauusd price trend was generally upwards. As long as RSI indicator does not move to below 50 the current gold trend remains intact. This is the reason the 50 center line mark is used to demarcate the signal between bullish and bearish trading signals.

The RSI technical indicator uses 14 day period as default period, this is the period recommended by J Welles Wilders when he introduced it. Other oftenly used periods used by Gold traders are the 9 and 25 day moving average.

RSI technical indicator period used depends on the xauusd 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 gold trading with.

To Calculate RSI Gold Indicator:

• The number of days that a gold 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 gold trading sessions that finished with an upward xauusd price change.
• The denominator is an average of all the down gold trading 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 xauusd price in a single gold trading session xauusd price period may skew the calculation of the RSI average and produce a false gold signal - whipsaw signal - in the form of a spike.

RSI Center-line: The center-line for this gold indicator is 50. A value above 50 implies that the xauusd market 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 xauusd 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.