The RSI on the $PAXG 4-hour timeframe is 24.3, entering oversold territory.
When I was first learning technical analysis, I’d buy the dip whenever I saw an oversold RSI. Only later did I understand that oversold merely means prices have fallen sharply and quickly in the short term. During a one-way downtrend, the RSI can stay below 30 for a long time; that doesn’t mean a rebound is imminent.
The RSI is often more effective in a sideways market, but in a one-way market, it can signal a reversal too early.
Extreme readings are usually accompanied by greater volatility. At such times, it’s better to reduce your position rather than make a big bet.
When I was first learning technical analysis, I’d buy the dip whenever I saw an oversold RSI. Only later did I understand that oversold merely means prices have fallen sharply and quickly in the short term. During a one-way downtrend, the RSI can stay below 30 for a long time; that doesn’t mean a rebound is imminent.
The RSI is often more effective in a sideways market, but in a one-way market, it can signal a reversal too early.
Extreme readings are usually accompanied by greater volatility. At such times, it’s better to reduce your position rather than make a big bet.