X

Sign Up To Our Free Newsletter

Join Now

Thanks for subscribing to our free newsletter!

ERROR

  • 3 minutes Texas forced to have rolling brown outs. Not from downed power line , but because the wind energy turbines are frozen.
  • 7 minutes Scientists Warn That Filling The Sahara With Solar Panels Is A Bad Idea
  • 11 minutes United States LNG Exports Reach Third Place
  • 15 minutes Joe Biden's Presidency
  • 4 hours America Makes Plans to Produce Needed Rare Earth Minerals Domestically
  • 1 day Texas Supply Chain Massacre
  • 7 hours U.S. Presidential Elections Status - Electoral Votes
  • 1 day Texas forced to have rolling black outs, primarily because of large declines in output from fossil fuel power plants
  • 1 day Former BP Exec "Biden not in war against oil" . . Really ?
  • 16 hours Here we go - again: plug-in hybrids cost motorists more than what they were told
  • 3 days Speaker Pelosi, "Tear Down This Wall" . . around Capital Building
  • 3 days Good Marriage And Bad Divorce: Germany's Merkel Wants Britain and EU To Divorce On Good Terms
  • 19 hours An exciting development in EV Aviation: Volocopter
Clean Energy Investing Is Becoming A Bubble

Clean Energy Investing Is Becoming A Bubble

Investment in clean energy has…

3 Ways To Play The Next Commodity Supercycle

3 Ways To Play The Next Commodity Supercycle

After a lackluster decade for…

Editorial Dept

Editorial Dept

More Info

Premium Content

This Previously Reliable Signal Looks Set To Flash Again

In trading, there are very few reliable technical signals, especially when it comes to predicting longer-term moves. Long-term shifts in direction usually come about due to fundamental changes in supply and demand, so past price action, the basis of technical analysis, is not a very reliable indicator. Some, though, are more reliable than others, and over the last two years there has been one signal for crude futures that has been worth watching. I wrote about it a few weeks ago, and is now close to being triggered for the fifth time in that period. It has been right, to varying degrees on all four previous occasions.

That signal is Relative Strength Index (RSI), or rather a slightly modified version of it.

RSI measures the strength of moves up and down in price over a given number of time periods. You don’t really need to know exactly how it is calculated, although if you do the information can be found here. Suffice it to say that it results in a number between 0 and 100 and that there are two signal lines, at 30 and 70. Crossing below 30 is considered to represent an oversold state, and therefore signals a buy, while above 70 signals the opposite.

Like all technical analysis, the biggest problem with RSI is that it can easily give false signals. That tendency can be reduced by looking for two successive crosses of the line and waiting to see a return to the “normal” band before acting. Then, if that fails take a small loss and if there…





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News