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
Bullish
GBP/USD
Bullish
USD/JPY
Bearish
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
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
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • RT @Tony_Nyman: Morgan Stanley #FX trades of the week Buy NZD/CAD at market for 0.8800. Stop 0.8220 Sell THB/KRW at market for 37.0. Stop 3…
  • UK General Election - majority odds...h/t @Oddschecker #gbp #sterling @DailyFX https://t.co/lc6an3ErVW
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.57%, while traders in France 40 are at opposite extremes with 84.00%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/lCP80FZFD8
  • Commodities Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.14% Gold: -0.53% Silver: -0.78% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/EGNbk1OlkQ
  • RT @TradeFloorAudio: UK Bookmaker Paddy Power cuts the odds of a Conservative Party majority at upcoming #GE2019 from 4/7 to 4/9 .... It ha…
  • Forex Update: As of 08:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.41% 🇳🇿NZD: 0.12% 🇪🇺EUR: 0.09% 🇨🇭CHF: -0.02% 🇦🇺AUD: -0.02% 🇯🇵JPY: -0.17% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/0Z5fYqqkex
  • LIVE NOW: Join Market Analyst @DavidCottleFX for a look ahead at the major economic data which will drive Asia Pacific markets in the coming seven days. Register here: https://www.dailyfx.com/webinars/985612483?CHID=9&QPID=917720
  • Indices Update: As of 08:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.19% US 500: 0.17% Germany 30: 0.11% France 40: 0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/GLPREk9GG5
  • Why financial market traders must monitor both monetary and fiscal policy?Find out from @MartinSEssex here: https://t.co/Fkzk88Y5gm https://t.co/BCtPSUCBO9
  • LIVE IN 30 MIN: Join Market Analyst @DavidCottleFX for a look ahead at the major economic data which will drive Asia Pacific markets in the coming seven days. Register here: https://www.dailyfx.com/webinars/985612483?CHID=9&QPID=917720
Trade Forex With The CCI Indicator

Trade Forex With The CCI Indicator

2013-12-13 20:00:00
Walker England, Forex Trading Instructor
Share:

Talking Points

  • Oscillators can be used to trigger trades with the trend.
  • CCI will help traders evaluate overbought / oversold levels.
  • Entries with CCI occur when momentum returns with the trend.

When traders need an indicator for planning an entry for a trending market trading plan, normally oscillators come to mind. Oscillators are a class of indicators designed to track price by moving (oscillating) either above or below a centerline. Today we will review CCI (Commodity channel index), which is a popular oscillating indicator and discuss how we can use it to trade retracements back in the trend.

Learn Forex – CCI Overbought / Oversold

Trade_Forex_With_The_CCI_Indicator_body_Picture_1.png, Trade Forex With The CCI Indicator

Reading CCI

If you are already familiar with other oscillators such as RSI (Relative Strength Index), you may already be familiar with how to read CCI. Both indicators use a mathematical equation to depict overbought and oversold levels for traders. Pictured above we can see these levels marked with CCI moving between them.

CCI uses a +100 value to indicator overbought levels, while below -100 value represents an oversold value. It is important to notice that 70-80% of the time CCI values actually tend to fall between overbought and oversold levels. This means traders will need to remain patient while waiting for one of these scenarios to occur. As with other overbought/oversold indicators, this means that there is a large probability that the price will correct to more representative levels. Knowing this, trend traders will wait for the indicator to move outside of one of these points before reverting back in the direction of the primary trend. Let’s look at an example using the strong trend on Gold (XAU/USD).

Learn Forex – Gold & CCI

Trade_Forex_With_The_CCI_Indicator_body_Picture_2.png, Trade Forex With The CCI Indicator

Gold & CCI

Above we can see an example of CCI in action using a daily graph of Gold, (XAU/USD). Due to the recent strength of the Dollar, and knowing that price the price of Gold has been moving generally lower, trend traders should look to initiate new selling positions. The primary way of timing entries with CCI in a downtrend is to wait for the indicator to move above a reading of +100 (overbought), and enter into the trade when CCI moves back below +100. This creates an opportunity to sell the currency as momentum is returning back in the direction of the trend. Traders should only enter after a full candle close on their chart, thus confirming a reading under the overbought value.

The above chart shows several past entries on Gold using CCI as an entry mechanism. Currently CCI is reading near its center line, so traders will need to wait for an opportunity to trade wait to trade the next retracement of the commodity.

---Written by Walker England, Trading Instructor

To contact Walker, email instructor@dailyfx.com. Follow me on Twitter @WEnglandFX.

To be added to Walker’s e-mail distribution list, CLICK HERE and enter in your email information.

Learn Your Next CCI Strategy!

Want to learn more about trading CCI? Sign up for our free CCI training course and learn new ways to trade with this versatile oscillator. Register HERE to start learning your next CCI strategy!

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

DISCLOSURES

News & Analysis at your fingertips.