That said, technically oriented traders look for the same type of patterns in the RSI chart as they see in the daily price bar chart - head-and-shoulder formations, double/triple tops and bottoms, pennants and flags, etc. Often, these patterns are more obvious on the RSI chart than in the bar chart of prices.

Divergences between movements in the price chart and the RSI arc are typically taken as strong indications of market turning points. The end of an uptrend, for example, may be signaled when new highs are scored on the bar chart, but not on the RSI scale.

Moving Average Convergence Divergence (MACD)

MACD is an oscillator used to signal trend changes and market direction. A market's 12- and 26-day exponential moving averages (EMAs) are tracked and used to generate two lines:

• Fast MACD - The red line plots the difference between a short (12-day) and long (26-day) moving average of the commodity's price.
• Slow MACD - The blue line in the MACD section plots the 9-day exponential moving average of Fast MACD. This line is typically named the "signal" line.

A crossing off the Fast MACD (red) line below the Slow MACD (blue) line, when both indicators are positive (> 0), indicates a market top. Crossovers occurring when both MACD values are negative are ignored.

Likewise, bottoms are confirmed when the faster red line crosses above the slower blue line as long as both indicators are negative.

To better visualize the difference between the MACD values, a histogram, colloquially known as the "forest" line, is plotted in black. Whenever Fast MACD is greater (more positive) than Slow MACD, the forest line value is positive; when FAST MACD is less (more negative) than Slow MACD, the histogram will show a bar sinking below zero.

In the August gold chart, the Fast MACD value is -1.59, while Slow MACD is 3.99. The difference, 5.58, is assigned a negative value because the fast indicator is below the slow indicator. The chart shows the MACD trend is down, with no indication yet of an imminent upside crossover.

Traders use MACD to confirm price trends depicted in the bar chart and to look for areas of divergence. An imminent trend reversal is indicated when there's an incongruence between a price trend and MACD signals.

Volume

The volume section of the chart indicates the number of commodity contracts changing hands on a given day. The greater the volume, the higher the vertical bar on the chart. Volume is a useful measure of the strength of price movements.