Chart journal · 12 August 2026

The 70 line is a fence, not a bell

A fence tells you where you are standing. It does not tell you to turn around.

In the Saturday room we draw the RSI 70 line and the RSI 30 line before anyone is allowed to talk about a turn. Students arrive having used those lines as bells: cross above 70 and something must be sold, cross below 30 and something must be bought. The line itself has never promised that. It only says the average of recent gains is large beside the average of recent losses, or the other way round.

Wilder's RSI, the one we teach, uses a 14-period lookback. On a daily chart that is about three weeks of closes. A market can live above 70 for many of those bars while the price is still making higher highs and the momentum sheet — our 10-bar rate of change — is still rising. Calling that a sell because a fence was touched is how people donate a trend to whoever is willing to wait.

What we ask at the fence

The first question is about price, and it is asked with the oscillator covered. Is the range expanding or shrinking? Did the bar close near its high, near its low, or in the middle? Only then is RSI uncovered, and only then momentum.

If RSI is above 70 and momentum is still making higher peaks, we write 'fence, still pushing.' If RSI is above 70 and momentum has already made a lower peak, we write 'fence, push fading.' Those are readings, not orders. The second sentence is allowed to be dull. Dull is often correct.

A chart from the July pack

One gold chart in the July pack spent eleven daily bars with RSI above 70. Momentum peaked on the fourth of those bars and made two lower peaks while price printed a last high. Several people in the room wanted the last high to be 'the' high. The annotation we accepted was narrower: momentum had failed to confirm, RSI had not yet left the fence, and the price high was still a high. The following week price fell. The week after that, a similar picture on another metal did nothing at all.

We kept both sheets in the folder. A fence-and-fade that is followed by a decline teaches the reading. A fence-and-fade that is ignored by price teaches the limit of the reading. The classroom needs both, or the 70 line turns back into a bell.

What to practise this week

Take one market you already follow. Print the daily bars, a 10-bar momentum line, and a 14-period RSI on three separate sheets. Mark every visit to 70 or 30. Beside each visit write only whether momentum was still pushing or already fading. Do not write a trade. Bring the sheets to a review, or to the next circle, if you want them argued with.

The classroom is where these drills are supervised. Back to the journal.