Commodity Channel Index (CCI) Indicator
The CCI indicator is very helpful for Forex traders. In particular, it helps to spot emerging trends and spot divergences between prices and the CCI. Such divergences indicate that the trend is slowing down and a reversal is about to occur. In addition, since the Commodity Channel Index is an oscillator, it can detect possible overbought and oversold situations.
Commodity Channel Index MT4 Indicator Trading Strategy
The chart illustrates the role of the Commodity Channel Index MT4 indicator. The indicator uses striking red lines to indicate overbought as well as oversold levels between +200 and -200. In contrast, the light green line indicates the zero point and the royal blue line indicates the +50 and -50 levels. In addition, it is the red oscillator that indicates the so-called Turbo CCI. the DODGER blue colored line is that CCI oscillator line.
When the CCI and Turbo CCI values rise above the +50 trigger level, the indicator sends a buy signal. Traders are likely to continue to hold the position, but exit when the Turbo CCI or CCI value goes below the ZERO line.
Similarly, if the Turbo CCI and CCI values fall below the trigger level. The indicator will send a sell signal. If the CCI and Turbo CCI and CCI values are above the ZERO line, then it can be considered an exit.
This Commodity Channel Index indicator is very helpful for Forex novices because it shows the trigger points to buy or sell according to the trend. However, experienced forex traders use this indicator to detect patterns of divergence.
Forex traders are able to use the Commodity Channel indicator not only for commodity indices. However, it can be applied to all trading instruments, although it contains the term “commodity”. CCI Oscillator is an oscillator with unbound levels on both positive and negative sides. It differs from other oscillators, which have fixed high and low levels. Therefore, Forex traders should use this indicator with caution when determining overbought and oversold levels. Because the indicator is not bound in any way, overbought or oversold conditions may last longer than expected. Therefore, it is highly recommended to use price to verify trading signals, as well as overbought and oversold conditions.
This Commodity Channel Index MT4 indicator helps forex traders to understand the relationship between prices and previous historical data. This means that forex traders are able to design profitable trading strategies by analyzing the potential or weak points of current price movements relative to previous history. Forex traders are very satisfied with the indicator’s ability to reveal divergences as well as increases or decreases in the strength of the current trend.