SMI XAUUSD Technical Analysis & SMI XAUUSD Signals
Developed by William Blau.
The SMI indicator is an adaptation of the classic Stochastic Oscillator indicator which smoothes out the stochastic trading indicator oscillations.
Construction of SMI
This xauusd indicator is calculated by comparing the gold 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 & then the values drawn to form the SMI.
When the closing gold price is greater than the average of the range, the SMI will move up.
When the closing gold price is less than the average of the range, the SMI will move downwards.
This oscillator ranges between the values of +100 and -100, this indicator is also less prone to whipsaws compared to the stochastic oscillator.
XAUUSD Technical Analysis and Generating Gold Signals
Buy and Sell XAUUSD Signals/ Crossover Signals
The SMI can be used to generate buy and sell signals using the method shown below, Buy when the SMI is heading upwards and sell when its heading downwards.
Buy & Sell XAUUSD Signals/ Crossover Signals
Overbought/Oversold Level XAUUSD Trading Crossovers
- Overbought levels above +40
- Oversold levels below -40
Buy signal is generated when this oscillator falls below over-sold level and then rises above this level & starts to move upward.
Sell XAUUSD Signal is generated when this oscillator rises above overbought level and then falls below this level and starts to move downwards.
Divergence Gold
The example shown below shows a bearish classic divergence between the gold price & the SMI. When the SMI showed this divergence the gold price trend reversed and started to move in a downward direction.
Bearish XAUUSD Trading Divergence
