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CCI indicator - how to determine the stability of a trend in Forex? CCI and MACD strategy



we will look in this article at one of the main technical tools of traders in the Forex financial market - the CCI indicator. It was developed by Lambert D. in the 1980s for use in commodity markets, but after successful use it spread to foreign exchange markets.

The decoding of abbreviations CCI is made as "Commodity Channel Index", and the graphical interpretation is a line that fluctuates between the levels +200 and -200. The main purpose of the indicator is to determine the strong and weak periods of the market, the moment when the trend reverses.


Practical application of the CCI indicator is based on the analysis of the chart of the changing price, which constantly crosses the levels +100 and -100, while the crossing of the level +100 in the direction from 0 is characteristic of an uptrend exactly until it crosses this level in the opposite direction. If the trend is downtrend, then the Commodity Channel Index chart will move from 0 to the -100 mark, and if the indicator shows a reversal in the direction from -100 to 0, then the sell trade should be closed. The essence of these rules was formulated by the founder of this method, but today they have already been significantly improved and expanded.


For a long-term market trend, the monthly CCI indicator will be effective. Then the following are added to the already existing features:


Weekly and monthly charts show the rise or fall of the trend in almost the same way, but with some caveats:


How to use the CCI indicator in MT4? Description of basic signals

  1. The first way to use the Commodity Channel Index is quite risky, but proven by many traders. This variant of work will consist in entering the market to buy when the indicator crosses the level of -100 by moving from the bottom up (exit from the oversold zone), and to start selling +100 when moving from top to bottom (exit from the overbought zone). Such a signal suggests that with an established trend and its confirmation, the trader will receive a good entry point, and on the other hand, with fluctuating movements in the range of +100 and -100, transactions will be conducted with low efficiency.
  2. In addition, another option for using the indicator is used - trading at the zero mark. A signal when the CCI indicator crosses the zero mark with a movement from bottom to top indicates the beginning of an aggressive buy (Buy), and if the zero mark is crossed by a movement from top to bottom, an active sell (Sell). In this unusual way, the trader will get productive work, which is based on a fairly early signal of the beginning of a new trend. But it should be noted that working with the instrument with this trading option is appropriate only when the overbought zone (+100 mark) or the oversold zone (-100 mark) is crossed.


Trading strategy with CCI and MACD indicators

For trading, let's take a volatile currency pair, for example Pound / Dollar. Set the timeframe to 4-hour (H4). We put our indicators on the price chart, let me remind you that these technical tools are standard and are located in the Navigator window, Indicators tab of the MetaTrader 4 trading terminal.

For the CCI indicator, set the period 14. The parameters for the MACD are set as follows:


And we exit the position if the CCI indicator crosses the line 0 from top to bottom. For more aggressive trading, the exit can be carried out at the intersection of -100, but the MACD, for both exit cases, should remain above 0. Stop loss for this strategy is unpredictable, since the trader must devote more time to monitoring an open position (online), but as a safety net, you can place protective orders at medium-term support and resistance levels.

The same is true for opening short Sell positions when MACD is below zero and CCI is below -100. The position is exited when the Commodity Channel Index crosses the 0th level upwards (or +100 for aggressive trading), while the MACD should remain below 0.





Published on: 9/14/20, 5:44 PM