Learn How To Trade Commodity Channel Index (CCI) In Forex

CCI indicator, developed by Donald Lambert stands for Commodity Channel Index and is widely used among forex traders for many different purposes. For example, CCI can be used to provide trading signals from the zero-crossing line, to identify overbought and overbought levels and to spot divergences in currency prices.

Here is a screenshot of how the CCI indicator looks:



Type of technical indicator: Oscillator

CCI Trading Assumptions

  • CCI is considered to be bullish above 0
  • CCI is considered to be bearish below 0
  • CCI readings above +100: strong uptrend
  • CCI readings below -100: strong downtrend

Forex signals from Commodity Channel Index

1. In uptrending markets

Look to buy the currency when CCI crosses below zero and then turns back above.

2. In downtrending markets

Look to sell the currency when CCI crosses above zero and then turns back below.

Usually, one indicator is not enough to build a complete trading solution, therefore it is strongly recommended to use CCI in conjunction with other technical indicators.

Download: CCI Divergence MT4 Indicator

How to use divergences?

Divergences are most commonly used in forex to predict price reversals in both up and down trending markets. In a nutshell, divergences occur when the currency pair price and the technical indicator (MACD, RSI, STOCH,…) trade in opposite directions. Read more …

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