Commodity Channel Index (CCI)




CCI indicator Forex


Commodity Channel Index (CCI)



Commodity Channel Index (CCI) is a hugely popular indicator among traders. Although novice traders tend to pay little attention to CCI in the beginning of their lerning curve, later they return to discover amazing potential and beautiful simplicity of the CCI indicator.

There is a variety of CCI indicators, just by looking at the screenshot below with various CCI versions, it becomes understandable - there is huge package of trading methods behind each simple and custom CCI indicator.

Variety of CCI indicators Forex

CCI download box


CCI.mq4
CCI_Histogram.mq4
CCI_Divergence.mq4
Real_Woodie_CCI.mq4
FX_Snipers_T3_CCI.mq4
FX_Snipers_Ergodic_CCI_Trigger.mq4
FX_Snipers_Ergodic_CCI_Trigger_Signals.mq4
CCI_Email_Alerts.mq4

Indicators built around CCI:

Forex MT4 indicator Forex_Freeway_2Forex_Freeway_2.mq4
Forex MT4 forex freedomMTF_Forex_Freedom_Bar.mq4

Additional CCI reading:

Forex MT4 indicator real woodies cciWoodiesCCI.pdf

Forex MT4 indicator real woodies cciTrading-Woodies-CCI-System.pdf

Fundamentals of trading with CCI indicator


Developed by Donald Lambert, original CCI consists of a single line which oscillates between +/-200.
CCI indicator was created to identify bullish and bearish market cycles as well as to define market turning points, market strongest and weakest periods.
Designed for commodities, CCI has quickly found its application in other markets including Forex.

The author advises to use CCI for entries and exits once CCI reaches +/-100. It goes as follows:
When CCI moves above +100, there is a strong uptrend confirmed, therefore traders should open a Buy position. The trade is held as long as CCI trades above +100. Exits will be made when CCI goes back below +100. Opposite true for downtrends and readings below -100.

Since 1980 when CCI indicator was first introduces, traders have found lots of ways to interpret CCI and expand trading rules. all those methods and views will be cover here.

CCI and its Zero line


An aggressive way to enter the market is to react to CCI's line crossing its zero level.
When CCI moves above Zero, traders would Buy the currency expecting a newly changed trend to hold. Vice versa, when CCI falls below zero, traders would Sell looking to benefit from early signals of an emerging downtrend.

CCI indicator zero line Forex

Simple rule:
Above zero - Buyers' territory,
below zero - Sellers' territory;

unless, we have reached an oversold/oversold zone.

CCI overbought & oversold zones


CCI indicator signals Forex

With CCI we can separate indicator readings to 3 zones:

1. Already known, a zone above Zero (bullish) and a Zone below zero (bearish).

Trading rules: when price crosses zero line, Buy/Sell depending on the direction of a crossover.

2. An overbought zone - CCI reading above +100, an oversold zone - CCI reading below -100

Once price moves higher above +100, a strong uptrend has been established. Hold on to a Long position, but prepare to exit as soon as beautiful tall candlesticks yield place to smaller reversal candles with long shadows and small bodies.

3. An extremely overbought zone - CCI reading above +200, and an extremely oversold zone - CCI reading below -200.

Take profit & close trades. Prepare for a price reversal.

Summary: CCI indicator signals


CCI indicator signals Forex

Bonus: CCI trading walkthrough


With what we know so far, we can already read and trade with CCI indicator.
Let's walk through the numbers on the screenshot below:

CCI indicator signals Forex

1 - CCI is in an overbought zone. The moment it entered there, we could have placed a Buy order, since we know that a strong uptrend has been established.

2 - CCI rises to an extremely oversold level, this is where we know that the reversal is near, so the measures are to tighten our stop loss and either exit as we spot a reversal pin bar candlestick or wait till CCI exits below 200.

3 - The moment CCI exits +200 zone we should close all remaining Long trades and look to Sell. With CCI exiting from an extremely overbought zone is a perfect opportunity to initiate our first Short trade.

At the same time, should we never witness CCI above 200, we'll be still holding our Buy position open, because CCI continues to trade inside an overbought zone.
(So, the difference is whether there was a rise above 200 or not. If we erase #2 event from the chart, we're trading in an overbought zone and continue to hold out Long position).

4 - As price exits from an overbought zone, we close all Long positions and can immediately open Short positions / add to existing Short trades opened at point 3.

5 - CCI crosses its Zero line and now is on Seller's territory. We can open yet another Short trade.

6 - Price enters an oversold zone (below -100), which tells us that a downtrend is already running strong. We can add up to a Short trade and hold till we find that CCI rises back above -100.



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Comments

I do think you have seriously consider building this website, comparing to Babybips but I felt this is much better education than babypips.com because you have demonstrated simple, shortcut, straightforward and easy to understand.

I do like babypips.com but sometimes they can be overwhelmed with the information. Please you can improve your website and I am sure more people will visit you.

Good luck.

 

Thank you for your feedback!
I'll do my best to improve it; just unlike with huge websites which have several people behind them, I'm working on this website alone. Thus, I admit I'm doing a much slower progress at the moment. Thank you for your support!

 

Can the cci be effective for scalping in 5 min or 1 min charts

 

CCI on 5 or 1 min - not a problem, if you want to scalp you can sure use it.

 

THANK YOU!

This is GREAT STUFF! I LOVE YOUR CCI Histogram MATCHED UP WITH THE SNIPER SIGNALS!

 

I thought I would mention this site is very nicely laid out, and is a resource I think I'll be returning to frequently. This is my first visit.

 

i cannot thank you enough for these explicit information. I now understand forex indicators better. Thumbs up!

 

Always my pleasure!

 

please ,i have a question, how does one use the i-panel multi-time frame indicator. i downloaded it from this site and i like it but feared i might use it wrongly. thank you for your kindness.

 

I'd need to make a separate page for it.
I might be able to do it by the end of this week. Please check back later.

 

Please visit new page with iPanel indicators explained

 

where are the choppy zone indicator and sidewinder indicator? i can't find them in the RealWoodieCci.mq4. but anyway this website is great!!

 

Thank you!

I have only this SideWinder_Overlay.ex4 for CCI sidewinder.

The choppy zone indicator I don't have, I'm sorry. I have Choppiness_index.mq4

 

I really like this indicator and see how useful it can be. i am currently using it to trade the daily. i havent tried it on any other period. Should I be using or could I use it on the 15 and 60 minute chart?

 

CCI can be successfully used across all time frames: from monthly to 1 minute.
You can be a position trader or a scalper, CCI indicator will always give you the edge in your trading analysis.

 

Thank you for your simple but clear information. This is indicator is great but but rarely used in forex classes.

 

Your site is amazing. Thank you for sharing your knowledge. I was using the CCI before coming to your site but, not to its fullest potential. You have helped me to use it in a very positive way. I have tried a couple of the CCI variations you have on your site and I am very impressed with the results I get with the FX_Snipers charts. I like understanding the underlying principles for charts which is why I have to come to your site. Do you have more info about the FX_Snipers charts? Yours is the only place I have even been able to find these indicators (and how grateful I am to have found them).

 

I can't thank you enough for taking the time to explain all these indicators so well to us. I believe in the concept that knowledge is the most valuable thing you can have and you have provided much of that knowledge. Great work and great site.

 

Thank you for creating such a fantatic resource of valuable and useful information. Your site, even though you are not a huge site, is the best ive found after visiting many many such sites! WELL DONE!

 

Thank you for this information, it is very important but I have little concern, I tried to download CCI_Histogram.mq4, but i canot, can any one tell how I will fix this issue?
Tnx

 

Right click + Save as... will do the job.
good luck!

 

Thanks good one

 

Great site and a real help to me, I am just starting fx trading
Thanks a lot
GB

 

You are really great man.. I never had forex info like this.. simple and compact. I will tell all my trader friends about this website. (sorry for my english not good) =)

 

Great site, many thanks

Just one question: how many periods do you recommend? the default on my CCI is 14, yet you have 34 and 50.