News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
More View more
Real Time News
  • Please join @PaulRobinsonFX at 6:00 EST/10:00 GMT for a webinar on how you can become a better trader in current markets. Register here: https://t.co/XO3SOn8u43 https://t.co/1AO0tXYz7L
  • Heads Up:🇬🇷 Unemployment Rate (JAN) due at 09:00 GMT (15min) Previous: 15.8% https://www.dailyfx.com/economic-calendar#2021-04-15
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/q7YCOo8DM1
  • US Dollar Looks to Retail Sales, Jobless Claims Data for a Lifeline - https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2021/04/15/US-Dollar-Looks-to-Retail-Sales-Jobless-Claims-Data-for-a-Lifeline.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #dollar #retailsales #joblessclaims https://t.co/vJVKJ5P92g
  • Heads Up:🇬🇧 BoE Credit Conditions Survey due at 08:30 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-04-15
  • 🇪🇸 Balance of Trade (FEB) Actual: €-1.082B Previous: €-1.769B https://www.dailyfx.com/economic-calendar#2021-04-15
  • 🇮🇹 Inflation Rate YoY Final (MAR) Actual: 0.8% Expected: 0.8% Previous: 0.6% https://www.dailyfx.com/economic-calendar#2021-04-15
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 92.93%, while traders in France 40 are at opposite extremes with 75.22%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/F80m5ro5O1
  • Heads Up:🇪🇸 Balance of Trade (FEB) due at 08:00 GMT (15min) Previous: €-1.769B https://www.dailyfx.com/economic-calendar#2021-04-15
  • Heads Up:🇮🇹 Inflation Rate YoY Final (MAR) due at 08:00 GMT (15min) Expected: 0.8% Previous: 0.6% https://www.dailyfx.com/economic-calendar#2021-04-15
Trading Gold and Oversold Markets

Trading Gold and Oversold Markets

Walker England, Forex Trading Instructor

Article Summary: How traders use the RSI indicator depends specifically on market conditions. Today we will review trading Gold with RSI, in extended market trends.

The Relative Strength Index (RSI) is a technical indicator designed to help us define market entries for a variety of trading conditions. (If you’re unfamiliar with RSI – Register for Our Free Course Here). However, depending on if the market is ranging or trending, traders should approach the overbought and oversold levels pictured below very differently. Today we are going to review the strong trend in gold, and exactly how RSI can be used to pinpoint market entries.

Learn Forex – RSI Indicator Levels

Trading_Gold_and_Oversold_Markets_body_Picture_3.png, Trading Gold and Oversold Markets

RSI Crossovers

Normally traders look to initiate new market orders when RSI swings back above an overbought or oversold value. This method is referred to as trading RSI crossovers. The rationale behind this is that traders are looking to buy when prices are low or sell when prices are relatively high. This can be a great strategy and normally will work when the market is in a range bound environment used in conjuncture with support and resistance levels.

However, at the moment this strategy is not conducive for trading gold. Due to the market being in a strong downtrend, traders should absolutely avoid entering trades when RSI crosses back above oversold values. The chart below tells the full story of the perils of buying RSI signals in a downtrend. In each of the last three examples, as RSI crossed back above 30 gold proceeded to move towards lower lows. This is absolutely a scenario all traders should look to avoid! So how can we use RSI in a trending market?

Learn Forex – XAU/USD with RSI Crossovers

Trading_Gold_and_Oversold_Markets_body_Picture_2.png, Trading Gold and Oversold Markets

Using RSI Momentum

Looking at the chart below, we can see that RSI may remain oversold in a downtrend for an extended period of time. This can often be disheartening for swing traders as they wait for RSI to move back above oversold values for a chance to sell a RSI crossover in a downtrend. The good news is, this is not the only way to trade using RSI! Let’s look at another way of trading the indicator.

One of the most overlooked ways we can use RSI in this environment is to sell into oversold values. This style of trading may seem counter intuitive at first, but it is very similar to trading a breakout. As price continues to decline and create new lows the RSI indicator will become oversold. Traders watching this momentum can actually institute new trades when RSI moves below 30. The Gold chart below is an excellent example of this technique at work. Instead of waiting for an upswing in momentum to buy, we will use a swing in momentum to sell.

Learn Forex – XAU/USD with RSI Crossovers

Trading_Gold_and_Oversold_Markets_body_Picture_1.png, Trading Gold and Oversold Markets

Using this technique each new low on RSI will provide a new signal for traders as long as the downtrend in gold continues. It is important to remember that market conditions are always subject to change. When the market trend ends, RSI traders can then shift gears and use a RSI range trading strategy.

---Written by Walker England, Trading Instructor

To contact Walker, emailinstructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list,CLICK HEREand enter in your email information

Want to learn more about trading RSI? Take our free RSI training course and learn new ways to trade with this versatile oscillator.Register HERE to start learning your next RSI strategy!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES