After identifying a directional market, many traders have problems timing market entries. Today we will discuss trading Forex trends using the CCI oscillator. Even though its name refers to commodities, CCI can also be used to trade currencies and other markets. Traditionally CCI can be used in a variety of conditions, including forex, ranges and trends.
Today we will primarily look at using CCI to trade trend retracements with overbought and oversold levels. CCI is very similar to other oscillators, such as RSIin that it depicts overbought and forex levels for traders. Knowing this, retracement traders will wait for the indicator to stretch outside of these levels and initiate new positions from the cross back inside the range.
Above we can see an example using a 4Hour graph of the NZDUSD currency pair. As prices decline with an established down trend in place, traders will anticipate taking new sell positions. This creates an opportunity to sell the currency as momentum is returning back in the direction of the trend.
Place your stop loss just below the swing high. Look to take profits at least twice the distance to your stop loss so you are cci at least a 1: Want to learn more about trading CCI? Take our free CCI training course and learn new ways to trade with this versatile oscillator. Register HERE to start learning your next CCI strategy! DailyFX provides forex news on the economic reports and political events that influence the currency market. Learn currency trading with a free practice account and charts from FXCM.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets. Learn forex trading with a free practice account and trading charts from FXCM.
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