RSI Indicator on a Live Gold Chart

What it shows

The purple line is the RSI. Guide lines sit at 70, 50 and 30. The band between 70 and 30 is lightly filled, and whenever the line pushes past 70 or below 30 that stretch turns green or red. The yellow line is a 14-candle simple average of the RSI itself, which is on by default. With divergence switched on, small labels mark where price and RSI disagree at a pivot.

How Pravex works it out

1. For each candle, take the change from the previous close (or whatever source you picked). A rise counts as an up move, a fall as a down move, both as positive sizes. A flat candle adds zero to both.
2. Average the up moves and the down moves separately over the length, the Wilder way: the first value is a plain average of the first 14, then each new one keeps 13/14 of the old average and adds 1/14 of the new move.
3. RSI = 100 − 100 ÷ (1 + average up ÷ average down). With no down moves at all the line reads 100, and with no up moves it reads 0.
4. The yellow line is then an average of the RSI over its own length. Choose SMA + Bollinger Bands as the second line type and you also get bands a set number of standard deviations above and below it.

Settings

Setting	Default	What changing it does
Length	14	How many candles the up and down averages cover. A shorter length swings to the edges more often; a longer one stays nearer 50.
Source	close	The price whose candle-to-candle changes are measured. hlc3 or ohlc4 soften a wick that closes back in range.
Mark divergences	Off	Turns on the divergence marks. A low pivot in RSI that sits higher than the one before while price made a lower low gets a bullish mark; the mirror case gets a bearish one. Pivots need 5 candles on each side, so a mark shows up 5 candles late.
Second line type	SMA	The kind of average drawn over the RSI: None, SMA, SMA + Bollinger Bands, EMA, SMMA (RMA), WMA or VWMA. Gold bars carry no volume, so a VWMA has nothing to weigh by here; any other type works.
Second line length	14	How many RSI values the yellow line averages. The setting is hidden while the type is None.
Band width in standard deviations	2	Used only with SMA + Bollinger Bands, it sets how far the bands sit from the yellow line.

How traders read it

The common reading is that above 70 the recent run has been one-sided upward and under 30 one-sided downward. That is a description of the last 14 candles, not a sell or buy call. In a strong gold trend the RSI can sit above 70 for days while price keeps climbing.

The 50 line often says more than the edges do. Holding above 50 on pullbacks says the up moves are still winning on average; failing at 50 from below says the sellers still are.

Divergence is the other use. Price makes a lower low but the RSI low is higher, so the drop was smaller in force than the one before. It is a hint that a move is tiring, and it often shows up several times before price turns, if it turns at all.

When it misleads

RSI only knows the size of closes against each other. A slow grind with tiny pullbacks can pin it near the top for a long time, and a single big candle can throw it to an edge and back. The 70 and 30 lines are habits, not fixed truths; on 5-minute gold candles they can be crossed several times a day. Read it with the trend on a higher timeframe and with real price levels.

Questions and answers

Is gold overbought when the RSI passes 70?

The average up move over the last 14 candles has been at least about 2.3 times the average down move, since 70 = 100 − 100 ÷ (1 + 2.33). It says the run has been strong and one-sided. It does not say the price has to fall.

Should I use a 14 or a 7 RSI on gold?

Pravex starts at 14 on the close. A 7 RSI reaches 70 or 30 far more often and suits short swings; a 21 gets there much less and reads more like a trend filter. Compare where each one sat at the last few turns you cared about.

Why does my RSI have a second yellow line?

That is the smoothing average of the RSI, a 14-candle SMA by default. Set the second line type to None to hide it.

Why do RSI divergence labels show up late?

An RSI low or high only counts as a pivot once the 5 candles after it have stayed above or below it, so the label lands on the fifth candle after the turn. That is a wait, not a redraw: once that candle has closed, the label stays where it is.

Related: Stochastic RSI, Moving Average Convergence Divergence, Stochastic, Money Flow Index, every indicator.