RSI Silver Analysis & RSI Trading Signals

Created 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 silver trend following indicator. RSI compares a price magnitude of the recent price gains against its magnitude of recent losses price losses and draws this data on a scale of values which ranges between 0-100.

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

• RSI is drawn as a green line
• Horizontal dashed lines are plotted to spotting over bought & oversold levels are i.e. 70/30 levels respectively.

Trading Analysis & How to Generate Trade Signals

There are several techniques used to trade, these are:

50-level Crossover Signals

• Buy signal - when the indicator crosses above the 50 a buy/bullish trading signal is given.
• Sell Trading Signal - when the indicator crosses below 50 a sell/bearish trading signal is given.

RSI Trading Setup Patterns

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

XAGUSD Support/Resistance Breakouts

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

Swing Failure - Support and Resistance Break out

Overbought/Oversold Conditions on Technical Indicator

• Overbought- levels above 80
• Oversold- levels below 20

These levels can be used to generate silver 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 Silver because they are prone to a lot of whipsaws.

Divergence Trading Setups

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