The drop in prices indicates that WTI is approaching oversold territory, suggesting that a potential reversal could be on the horizon.1)
We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In the case of Ardagh Metal Packaging SA, the RSI reading has hit 29.6. A bullish investor could look at AMBP's 29.6 reading as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.
Traders go long (buy) when the RSI drops below 30, and they go short (sell) when the RSI reaches a reading of 70.
The current trend looks strong, although RSI is moving into the overbought territory, which increases risks for the bulls.