Top 3 CCI Trading Strategies for Consistent Returns - douglasraides

Verbal description: The Commodity Channel Index or CCI is a very popular momentum oscillator used by short term traders. Developed aside Donald Lambert during the 1980's to analyze mainly commodities, the indicator became a popular tool for equity and currency analysis as wellspring.

Here we will have a look at some of the high-grade CCI trading strategies of all times:

1. CCI Dual Time Ensnare Trading Strategy: This strategy harnesses the power of higher fourth dimension frames to take low-risk, high probability trades happening lower clock time frames.

To begin with, the trading bias of the financial instrument is first dictated with the help of higher sentence frames. This is done to be on the moral side of the markets. For example, if we are pondering happening taking trades along the day-to-day time frame then our higher time frame is weekly.

When the weekly CCI goes above +100 the bias turns Gram-positive and remains positive until it dips below -100. Similarly when the weekly CCI trading indicator dips beneath -100 the bias turns negative and remains antagonistic until the CCI rises above +100.

In the preceding each week chart of Tata Sword Ltd, we have well-marked the instances when the 20-period CCI surged above +100 or plunged below -100 using light-green and red vertical lines respectively.

In real time we electrical switch to the daily chart of the unvarying instrument and fool the instances when the 20 point CCI dipped below -100 and rose wine above the zero line during a bull mode or surged above +100 and fell downstairs the cardinal crease during a bear mode from the weekly time human body. Long entries are shown using green hierarchical dotted lines whereas short entries are shown with red vertical dotted lines.

As you can see in the chart above the system has worked quite well during both bull and contain phases of the market.

2. CCI Departure Trading Strategy: Divergences often impressive trend changes. As the nominate suggests, a discrepancy occurs when the price and the directional momentum of the oscillator diverge from one some other giving U.S. signs of a trend reversal.

Simply put, when price makes a higher high but the CCI refrains from doing so and makes a lower sopranino rather, it indicates that the upward momentum is waning. Conversely, when the price makes a lower low but the CCI refrains from doing so, it indicates that the downwardly momentum is getting abated and results in what is legendary as a disagreement.

However, a divergence in itself doesn't guarantee a trend change. It impartial indicates that the momentum is slowing down which oft precedes a trend change. Hence, peerless should ever wait for a verification indicate such as the zero line divulge along the CCI indicator to enter a trade.

In the above example of ONGC, we can find how check entry signals were generated on a break of the nada dividing line on the CCI following divergences connected the oscillator that turned out to equal winning trades.

3. CCI Pullback Trading Strategy: Only as CCI divergence trading system attempts at catching the trend reversals, CCI pullback trading strategy attempts at trading in the direction of the predominant trend.

In this strategy we look for buy setups when price breaks proscribed of a retracement pattern along with fresh CCI readings above +100. Similarly, we seek sell setups when Mary Leontyne Pric breaks bolt down of a retracement form on with weak CCI readings below -100.

A CCI reading above +100 oft foretells of an extended uptrend and a CCI reading higher up -100 often foretells of an elongated downtrend indicating towards a virile momentum in the course.

In the to a higher place case of Reliance Industries, we potty experience how buy signals were generated aft price broke out of a Bullish Flag patterns along with CCI readings higher up +100.

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Source: https://www.abhijitpaul.com/top-3-cci-trading-strategies-for-consistent-returns/

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