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Forex Commodity Channel Index: A Comprehensive Guide


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Commodity Channel Index:

The CCI also known as the Commodity Channel Index was introduced in the year 1980 by Donald Lambert. At first, CCI was designed in order to recognize cyclical movements within the commodity marketplace, however it is essentially a multipurpose analytic technical system.


CCI can be calculated using normal pricing & a typical moving average after which standard deviation is added along with a .015 scaling factor.

The above scaling factor limits around 70 percent to 80 percent of the indicators oscillations amid +100 & -100.
CCI can be used for trading currencies, commodities as well as equities. All chartable properties can be evaluated using this system. CCI fluctuates above & below the zero line. Several trading schemes have been produced with the help of CCI. It’s a useful indicator that could make buy & sell signals using various ways.

About Forex Commodity Channel Index:

The Forex Commodity Channel Index can act like a warning whenever the trading reaches extreme overbought/ oversold circumstances.

How to Achieve a Winning Ratio of More Than 70% with Forex Commodity Channel Index?

1) You should first be able to recognize the trend for ensuring that you’re trading with the right trend. This can be typically done by using bigger time frames such as daily chart or 4hr chart. In case the value is making lower lows & lower highs, then it’s a bearish trend. In case the price is making higher highs & lower lows, it’s a bullish trend.

2) So for instance, let’s assume you’re involved in a market that is up trending. Here, you’ll be simply looking to purchase.
If the value makes a short retracement towards the downside in an up trending market & the CCI becomes less than -200, then it’s a strong indication that the retracement may be over & the value will keep on moving up again.

A candlestick outside bar or an inside bar can help you get a very low risk trade which can greatly increase your odds of winning it.

3) For making things clearer, let us take an instance in a bearish market trend. Hence, in case the price in a downward trending marketplace makes a short retracement towards the upside & the forex commodity channel index gets over +200, it may be a powerful indication that the retracement is done & the value will be continuing it’s down ward trend shortly.

Now wait for some time to see an outside or an inside bar prior to executing your trade. This will ensure the price action is also authorizing the retracement is done & that the value will most likely move downwards from there.

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