SMI Silver Technical Analysis and SMI Trading Signals

Developed by William Blau.

SMI technical indicator is an adaptation of the classic Stochastic Oscillator technical indicator which smoothes out the stochastic indicator oscillations.

Construction of SMI

This silver technical indicator is calculated by comparing the xagusd price relative to the average of an n number of periods.

Then instead of plotting these values directly, smoothing using an Exponential Moving Average is applied and then the values drawn to form the SMI.

When the closing xagusd price is greater than the average of the range, the SMI will move up.

When the closing xagusd price is less than the average of the range, the SMI will move downwards.

This oscillator ranges between the values of +100 & -100, this indicator is also less prone to whipsaws compared to the stochastic oscillator.

XAGUSD Trading Technical Analysis & How to Generate Trading Signals

Buy & Sell Silver Trading Signals/ Crossover Signals

The SMI can be used to generate buy & sell xagusd signals using the method shown below, Buy when the SMI is heading upwards and sell when its heading downwards.

Buy & Sell Silver Trading Signals/ Crossover Signals

Overbought/Oversold Level XAGUSD Trading Crossovers

• Overbought levels above +40
• Oversold levels below -40

Buy trading signal is generated when this oscillator falls below oversold level & then rises above this level and starts to move upwards.

Sell Silver Trading Signal is generated when this oscillator rises above overbought level & then falls below this level and starts to move downward.

Divergence Silver Trading

The example explained and shown below shows a bearish classic divergence between the xagusd price and the SMI. When the SMI showed this divergence the xagusd price silver trend reversed and started to move in a downward direction.

Bearish XAGUSD Trading Divergence