Hello Traders it's been a while since we posted a new video on the channel but now we're back
again with more videos if you are new on the channel please subscribe to the channel hit the
like button and also hit the notification bell in today's video we will take a look at a profitable
trading strategy using cci and moving average the cci indicator stands for commodity channel index
is an indicator used in the technical analysis of the financial and forex markets the cci indicator
is a momentum-based indicator and belongs to the oscillator group of technical indicators
however the commodity channel index indicator might seem similar to most other oscillators
it is unique due to the fact that the indicator is used to measure price momentum based on the
typical price a typical price which considers the high low and close price is a better measure
of momentum than just closing price the cci indicator has three variables that you can change
period type of price and levels period the period in the cci indicator setting is used
to set the number of look back periods the standard cci setting is 14 periods
this value can be changed based on the forex cci strategy that you use
we have the standard forex cci indicator with the default settings which is a 14-period
look-back period this serves as the basis for calculating the cci data for the past 14 periods
if applied on the daily chart this would be 14 days or if applied on a one hour chart
this would be the past 14 hours type of price the type of price is a drop down that you can select
the standard setting is typical price typical price is simply the average of the high
low and close levels last but not the least are the levels in the cci indicator
by default the levels are set to minus 100 plus 100 these values can of course be changed as well
when the forex cci indicator rises above the standard plus one hundred
or falls below minus one hundred it signals overbought and oversold levels in the market
but also what we can observe is that when the cci index rises above plus 100
it indicates strong upside momentum that means the price will continue moving in the same direction
similarly when the cci indicator falls below minus 100 the indicator suggests
strong downside momentum and signals a continuation in the decline in price
this indicator can also be used to identify overbought and oversold levels
when the markets are range bound the cci can be used to signal overbought and oversold conditions
this can be especially useful for traders who want to trade breakouts or to trade within the ranges
the best way to trade the overbought and oversold conditions with the cci
indicator is to first identify a range or a sideways market
once you do that look for the highs and the lows that are established by price action
then once price reaches the upper range look for the cci to signal exhausting momentum
this means that the cci must be falling after rising above plus 100 level similarly when the
price is at the lower range the cci must be rising from -100 after initially falling below this level
trading strategy all right now that you have learned everything about the cci indicator
let's dive into trading strategy for this trading strategy we are going to combine the cci indicator
with a trend indicator such as moving averages the logic for this strategy is very simple because we
are combining both the trend following indicator as well as the zero level and the oversold
overbought of cci indicator for this strategy we are going to use only two trading indicators
cci using default settings two exponential moving averages set at three and twenty five
we use a fast and slow exponential moving average so we can see the potential trend change earlier
the moving averages will show you the approximate trend and change of trend when
the crossover occurs cci is an oscillator that will show you whether the market is oversold or
overbought this is the perfect time to take your profit you can use any time frame but consider
that amount of noise on lower time frames for currency pairs choose the major forex
currency pairs with the more volatile trading rules selling rules step number one the three
exponential moving average must cross the 25 exponential moving average to the downside
step number two see the cci indicator and wait for price to cross the zero level to the downside
step number three place a sell order once the cci crosses the zero level step number four
place your stop loss on the previous swing high or a few pips above the current price
step number five take profit once the price goes around the oversold
buying rules step number one the three exponential moving average must cross the 25 exponential
moving average to the upside step number two see the cci indicator and wait for price to cross the
zero level to the upside step number three place a by order once the cci crosses the zero level step
number four place your stop loss on the previous swing low or a few pips below the current price
step number five take profit once the price goes around the overbought areas all right thanks for
watching in case you have any questions don't hesitate to ask in the comments please don't
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