Forex indicators. CCI indicator

Indicator CCI (Commodity Channel Index) is quite well known among traders. It includes nearly every book on technical analysis. In programs for trading in forex it is also present. CCI shows the deviation of the price of the currency pair, its average value over the period. Operates as an oscillator, that is showing an overbought and oversold conditions in the market. But unlike most of them, change the boundaries of the CCI are not limited. Overbought and oversold levels are given 100% and 100%, respectively.

In the CCI only one parameter - the period for which the value is calculated. By indicator, Donald Lambert, advised to use it with a period of 60 or 20 to find cycles in the market. If we can find a circular dependency in the graph, we can accurately determine the beginning and end of trends. CCI is not often used in markets, and its potential is not yet fully understood.

The CCI can be used in Forex trading system of the form:

- Oscillator. As mentioned above, the overbought and oversold levels are beyond 100% and 100%. We enter into a long position when the CCI crosses the 100% from the bottom up. As we enter a short position when the CCI crosses the 100% down.

- Divergence . If the CCI makes a new high, but does not overcome the previous one, and the price at the same time making a new vertex after the old, there is a good chance that trend will end and there will be a reversal. Therefore we are selling at the signal. For purchases below the downtrend - on the contrary.

- System Woodies CCI. Very well-known forex trading strategy created by Ken Woody, which uses the CCI patterns and several other supporting indicators. In a detailed study and subsequent use of the system is very effective.

If you want to use the indicator Forex CCI in its trading system, it is necessary to remember that the CCI very cranky and has no clear boundaries. Selection of parameters should be done after careful testing and optimization. In Woodies CCI system you simply follow the instructions - it is quality tested for a long time, and still has not lost its relevance.