Step #1: Wait until the CCI indicator crosses below -100 level
When we get a CCI reading below the -100 level, that shows statistically the USD gained more strength than average and therefore great for selling opportunities.
As a leading indicator, the Commodity Channel indicator can provide us with excellent great trade signals.
When the CCI crosses for the first time below the -100 level that’s the signal that a new bearish trend is about to start or at least a rally will emerge from where you can extract sound profits.
Step #2: Wait for a retracement and make sure that during that retracement the CCI indicator holds below the zero line.
Waiting for a pullback in price is a more defensive trading approach. However, you can also sell right away when the CCI crosses below -100. In this case, you need to make sure enough time has elapsed between now and the last time the CCI passed below -100.
We’re going to apply the more conservative approach and wait for a retracement and the CCI indicator to hold below the zero line during this retracement.
We want to see a weak retrace in the CCI indicator that barely goes above the -100 level, but at the same time, we need to look at the price action retracing more than the CCI did.
We want to have strength to the downside, if we’re going to sell ETH/USD we want to see continued strength in the CCI reading when the price is pulling back.
When the retracement happens, it’s important for the CCI indicator to remain below the zero line. If the CCI crosses above the zero line during the retracement, we’re no longer interested in going short ETH/USD.
This is one perfect example of how to filter bad trades from the right trades.
Note* The less the CCI turns up, the more powerful the rally should be.
Step #3: Sell after 3 or 5 candles “worth” of retracement. Or, sharp Corrections are sold at the closing price.
Now, we’re looking for short trades.
We have two options for our entry strategy.
We either sell after we have seen the market pulling back over the last 3-5 candles or we sell straight away if we have sharp corrections.
The natural ebb and flow of the market are given by these short-term pullbacks that we’re going to use to trigger our entry.
If the retrace was weak, it means the dominant energy of the market remains. The CCI indicator strategy reflects quite well what is happening behind the scene where the actual buying and selling pressure takes place.
Step #4: Place your protective Stop Loss below the most recent swing low
We’re proposing a very easy strategy to manage your stop loss. Simply place your protective stop loss below the most recent swing low.
However, it’s important to also watch the CCI indicator for further clues of weakness, and if the CCI crosses above the +100 level after you’ve entered the market, you can close the trade at the market price if your stop loss wasn’t triggered in the process.
Step #5: Take profit if CCI touches -200 or if CCI drops above the zero level. Whichever happens first.
We have two trading tactics to implement when dealing with exits.
The more profitable exit strategy is to take profits when the CCI touches the +200 level. However, since the market will only occasionally give us such big trading opportunities we need to have a backup plan.
So….
As soon as the CCI indicator turns below the zero level, we want to exit our trade. The first sign that the rally is running out of steam is when the CCI indicator crosses below the zero line.
I have also shown here 2 other options of taking profit. One is risk reward ratio (1to1, 2to1, 3to1). The second is a fib extension take profit. This trade hit the 227.2% fib.
Note** the above was an example of a SELL trade using our CCI trading strategy PDF. Use the same rules for a BUY trade – but in reverse.
PM me if you want to read the complete CCI trading strategy. Some intro information is on the update below.
When we get a CCI reading below the -100 level, that shows statistically the USD gained more strength than average and therefore great for selling opportunities.
As a leading indicator, the Commodity Channel indicator can provide us with excellent great trade signals.
When the CCI crosses for the first time below the -100 level that’s the signal that a new bearish trend is about to start or at least a rally will emerge from where you can extract sound profits.
Step #2: Wait for a retracement and make sure that during that retracement the CCI indicator holds below the zero line.
Waiting for a pullback in price is a more defensive trading approach. However, you can also sell right away when the CCI crosses below -100. In this case, you need to make sure enough time has elapsed between now and the last time the CCI passed below -100.
We’re going to apply the more conservative approach and wait for a retracement and the CCI indicator to hold below the zero line during this retracement.
We want to see a weak retrace in the CCI indicator that barely goes above the -100 level, but at the same time, we need to look at the price action retracing more than the CCI did.
We want to have strength to the downside, if we’re going to sell ETH/USD we want to see continued strength in the CCI reading when the price is pulling back.
When the retracement happens, it’s important for the CCI indicator to remain below the zero line. If the CCI crosses above the zero line during the retracement, we’re no longer interested in going short ETH/USD.
This is one perfect example of how to filter bad trades from the right trades.
Note* The less the CCI turns up, the more powerful the rally should be.
Step #3: Sell after 3 or 5 candles “worth” of retracement. Or, sharp Corrections are sold at the closing price.
Now, we’re looking for short trades.
We have two options for our entry strategy.
We either sell after we have seen the market pulling back over the last 3-5 candles or we sell straight away if we have sharp corrections.
The natural ebb and flow of the market are given by these short-term pullbacks that we’re going to use to trigger our entry.
If the retrace was weak, it means the dominant energy of the market remains. The CCI indicator strategy reflects quite well what is happening behind the scene where the actual buying and selling pressure takes place.
Step #4: Place your protective Stop Loss below the most recent swing low
We’re proposing a very easy strategy to manage your stop loss. Simply place your protective stop loss below the most recent swing low.
However, it’s important to also watch the CCI indicator for further clues of weakness, and if the CCI crosses above the +100 level after you’ve entered the market, you can close the trade at the market price if your stop loss wasn’t triggered in the process.
Step #5: Take profit if CCI touches -200 or if CCI drops above the zero level. Whichever happens first.
We have two trading tactics to implement when dealing with exits.
The more profitable exit strategy is to take profits when the CCI touches the +200 level. However, since the market will only occasionally give us such big trading opportunities we need to have a backup plan.
So….
As soon as the CCI indicator turns below the zero level, we want to exit our trade. The first sign that the rally is running out of steam is when the CCI indicator crosses below the zero line.
I have also shown here 2 other options of taking profit. One is risk reward ratio (1to1, 2to1, 3to1). The second is a fib extension take profit. This trade hit the 227.2% fib.
Note** the above was an example of a SELL trade using our CCI trading strategy PDF. Use the same rules for a BUY trade – but in reverse.
PM me if you want to read the complete CCI trading strategy. Some intro information is on the update below.
Note
One of the fundamental trading principles that our team at Trading Strategy Guides religiously follows is to trade in the direction of the dominant energy of the market. But how DO we determine the dominant energy of the market?That’s where the CCI indicator strategy comes in and the price action as well.
The CCI indicator strategy was really designed to find cyclical trends in the market and to be used as a bearish or bullish filter. The CCI is simply an oscillator indicator that moves the majority of the time between +100 and -100.
Technically, the way to interpret the Commodity Channel indicator is that a positive reading above +100 is a bullish signal and a start of an uptrend, while a negative reading below -100 is a bearish signal.
You have to keep in mind that technical indicators are just mathematical equations. However, the CCI is a leading indicator which means it doesn’t lag behind the price
A good trading tip on how to use the CCI indicator is in conjunction with chart analysis, which is the central theme of this CCI trading strategy PDF.
The CCI trading system doesn’t look for overbought and oversold signals. You have to understand that when we’re below -100 CCI reading that is actually showing strength. In other words, the dominant market energy is to the downside.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.