We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Heads Up:🇯🇵 Housing Starts YoY due at 05:00 GMT (15min) Expected: -12.1% Previous: -7.6% https://www.dailyfx.com/economic-calendar#2020-05-29
  • Heads Up:🇯🇵 Consumer Confidence due at 05:00 GMT (15min) Previous: 21.6 https://www.dailyfx.com/economic-calendar#2020-05-29
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.14%, while traders in US 500 are at opposite extremes with 78.47%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/RqW7nbBjB3
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.28% 🇪🇺EUR: 0.14% 🇦🇺AUD: 0.12% 🇬🇧GBP: 0.07% 🇳🇿NZD: -0.06% 🇨🇦CAD: -0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/4JS19zN9h3
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: US 500: 0.04% Wall Street: -0.05% FTSE 100: -1.04% France 40: -1.29% Germany 30: -1.41% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/KJYkjRqknS
  • USD/ZAR: A rally from here could be an important tell as to whether the level seen as support previously (17.76) will turn into a point of resistance for sellers to lean against. Get your $USDZAR technical analysis from @PaulRobinsonFX here:https://t.co/TNsQ4JJu6E https://t.co/GMxZj0n8XP
  • Emerging market currencies haven’t been treated equally by the effects of global contagion, even if most have suffered to some degree. However withdrawal of investment flows could hit them all. Get your market update from @DavidCottleFX here:https://t.co/QzNoNYgMgP https://t.co/j71z9WYeBm
  • My trading video for today: "S&P 500 and $AUDUSD Await Trump China Presser, $EURJPY Climbs on Stimulus" https://www.dailyfx.com/forex/video/daily_news_report/2020/05/29/SP-500-and-AUDUSD-Await-Trump-Statement-EURJPY-Climbs-on-Stimulus.html?ref-author=Kicklighter&QPID=917719&CHID=9
  • Wall Street Futures Update S&P 500: -0.21% Dow Jones: -0.30% NASDAQ 100: -0.12% (delayed) - BBG
  • The US Dollar could rise against #ASEAN currencies such as the Singapore Dollar as US-China tensions seem to escalate. The Indian Rupee is also looking ahead of local 1Q GDP data.Get your market update from @ddubrovskyFX here:https://t.co/LkEFJViPWY https://t.co/I2HhrD40vi
How Forex Traders Use CCI to Trade GBPUSD

How Forex Traders Use CCI to Trade GBPUSD

2013-12-19 04:05:00
Gregory McLeod, Currency Analyst
Share:

Talking Points

- Since the July lows, GBPUSD has rallied 1671 pips in a strong uptrend.

- The Commodity Channel Index (CCI) measures deviations from the moving average while showing overbought and oversold conditions

- When CCI crosses up above the -100 line, a buy signal is generated

Don’t get thrown off by the lengthy name “Commodity Channel Index” as it is not a new 24-hour cable broadcast devoted to pork bellies and soybeans; though you could use it to trade either of these. CCI is a popular indicator used by Forex traders to identify oversold and over bought conditions much in the same way that RSI or Stochastics is used. But instead of 30 and 70 representing oversold and overbought areas, CCI uses -100 and +100. Though Donald Lambert created CCI back in 1980 to identify cyclical turns in commodities it is very effective with currencies. By measuring the current price relative to the average price of a set period like 14, CCI is low during time prices are below their average and high when prices are above their average. This gives us the oversold and overbought regions.

Why is this important you may ask? Well, it is simple. When we have a strong uptrend, the best place to buy is at price point where traders are no longer selling or selling pressure begins to subside. This is called being “oversold”. How do we know when something is oversold? This is a great question too! Forex traders have several tools and methods at their disposal to show them when prices have fallen too far too fast and when bargain hunters may step in sending prices higher. Candlestick pattern, oscillators and support/resistance levels are the primary tools. With CCI, Forex traders look to buy when CCI crosses above -100.

How Forex Traders Use CCI to Trade GBPUSD

Similar to real estate investing, without the headache and a lot more fun, Forex traders want to buy the “worse house in the best neighborhood at the lowest price.” In our analogy, the best neighborhood is a strong trend; the “worse house” is the entry zone for our trade. Like the real estate investor, we look for the value of our holdings to increase over time. Since we have bought at a relatively low price, our risk is small relative to the potential gain. Unlike real estate fixer-uppers, Forex traders can forget remodeling as time and trend work to increase the value of the position

Learn Forex: GBPUSD CCI Buy Signals

How Forex Traders Use CCI to Trade GBPUSD

(Created using FXCM’s Marketscope 2.0 charts)

Trading Setup

The current trading setup below shows a GBPUSD daily chart uptrend from August 2013. The chart depicts four successful by signals given by CCI as it crossed down below the -100 line and turned up. Forex trend traders would filter out the sell signals generated when CCI crossed down below the +100 line as more pips are gained when trading with the trend than against it. In an uptrend, traders Forex Traders will take buy signals using CCI and use CCI sell signals to take profits. Waiting for CCI to turn above -100 and looking for price to confirm the move, traders will enter the market long and then place a protective stop order about 4-10 pips below the last swing low.

The Trading Plan

Currently, GBPUSD has just bounce from the 1.6220 area and CCI has generated a buy signal when it crossed above the -100 line. A stop could be placed just below that swing low for a target of 1.6671. Remember to always use stops and to only risk no more than 2% of your account equity on any trade. If the stop is hit, then we look for another trade! CCI is simple way to visually identify potential entries.

---Written by Gregory McLeod Trading Instructor

This article showed you how to use CCI to trade the strong GBPUSD trend. I want to invite you to enroll in our free CCI Course to give you additional practice using CCI buy and sell signals. Sign our Guestbook to gain access to this course that will help you get up to speed on Forex market basics. You can master the material all while earning your completion certificate. Register HERE to start your Forex learning now!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.