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CCI Divergence Trading Strategy
In the world of forex trading, divergence is simply where the price of a particular currency pair is making new highs, but a relevant technical indicator is failing to make new highs (and starting to move lower), or where a forex pair is making new lows, but a technical indicator is failing to make new lows (and starting to move higher).
The significance of this is that it basically signals that the existing trend is running out of momentum, and there is likely to be a price reversal that you could potentially profit from.
The CCI Divergence System
You can use many different indicators to trade these divergence patterns, such as RSI and Stochastics, for example, but in this article I want to discuss a CCI divergence trading system that you can use to trade the major forex pairs because the CCI technical indicator is one of the most effective ones that you can use for this purpose.
If you want to, you could add a CCI indicator to your price chart and look for divergence to occur using this one indicator, but for stronger signals, it is a better idea to use two CCI indicators with different settings, and wait until divergence occurs on both indicators at the same time.
I have always found that the CCI (10) and CCI (60) tend to give good signals if they both show divergence at the same time because the price will often reverse in the opposing direction when this occurs.
However some traders like to use different combinations, such as CCI (13) and CCI (89), for example, or CCI (34) and CCI (170), as shown in the trading example below:
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Your overall success rate will largely depend on which time frame you like to trade, so it is worth experimenting with different settings.
With regards to entry points, many traders like to enter a position at the close of the following bar or candle after the divergence pattern is first seen, like in the example above, and determine their exit point based on 1 or 2 x ATR, a fibonacci retracement level such as 23.6% or a set number of points, depending on the time frame that is used.
Whichever rules are applied, it is always a good idea to use a stop loss when entering any positions, and to look to make more points from your winning trades in order to compensate for any losing trades because there are no guarantees of success even with the strongest divergence signals.
CCI Divergence Indicators For MT4 / ProRealTime
If you are having trouble seeing these divergence patterns on your price charts, you might want to consider using one of the CCI divergence indicators that are available for some of the charting platforms.
I have already discovered that there is a CCI divergence indicator on ProRealTime that is really easy to use because it shows a green bar when there is positive divergence, a red bar when there is bearish divergence and no bars when there is no divergence at all.
So obviously when you get two green bars or two red bars on two different CCI indicators at the same time, this is clearly a very strong signal, and is very easy to see, as you can see below:
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The two lines indicate where there is bullish divergence on both the CCI (34) and CCI (170), and therefore where to enter a long position, and as you can see, both of these set-ups would have been profitable, albeit to differing degrees.
Как использовать индикатор CCI.
If you don’t have access to the ProRealTime platform, I understand that there is another CCI divergence indicator on the MT4 platform that you can use (the download link can be found on this page ), although I haven’t actually used this one myself yet.
So there are options if you don’t want to be staring at your charts all the time trying to spot these divergence patterns yourself.
Alternative CCI Divergence Trading Strategies
I have already discussed one strategy that attempts to trade price reversals when there is clear divergence on two separate CCI indicators, but there are other ways you can trade these divergence patterns.
Best Forex CCI Trading Strategy (Commodity Channel Index Explained For Beginners)
For example, you can use the longer term CCI indicator to indicate the current trend (above 0 = bullish trend, below 0 = bearish trend), and then wait for opportunities to trade with this trend by waiting for divergence to occur on the shorter-term CCI indicator.
So if the CCI (60) is above 0, this indicates a bullish trend. Therefore you would want to wait for the price to fall back and for a bullish divergence pattern to emerge on the CCI (10), for example, before entering a long position.
Finally, instead of using two CCI indicators with different settings, you might like to try using the CCI indicator in combination with the RSI indicator because these indicators will also give very strong signals if there is divergence on both of them at the same time.
В индикаторной стратегии Форекс “CCI Divergence + Trend Line” мы будем использовать дивергенцию индикатора Commodity Channel Index (CCI), дающую сигнал о развороте или временном откате цены. Валютная пара – любая, временной интервал – от 15 минут и выше.
Для начала нужно установить на график индикатор FX Sniper’s CCI (скачать). Также можно воспользоваться готовым шаблоном (CCI divergence).
Теперь нужно определиться с термином “дивергенция Commodity Channel Index (CCI)” для индикаторной стратегии Форекс “CCI Divergence + Trend Line”. Итак, дивергенция (англ. divergence) – расхождение цены на графике валютной пары с направлением индикатора CCI. К примеру, цена рисует идущие один за другим максимумы, а индикатор CCI рисует аналогичные минимумы – это дивергенция. Или же цена нарисовала несколько минимумов, а на графике осциллятора CCI видны последовательные максимумы – это также называется дивергенцией.
Согласно стратегии Форекс на основе индикаторов “CCI Divergence + Trend Line” заключается длинная сделка (покупка), если:
1. Тренд нисходящий (цена рисует минимумы, следующие один за другим).
2. Наблюдается дивергенция CCI на этом же таймфрейме.
3. Второй экстремум CCI показывает закрытие 1-2 баров или больше после того, как сформировалась дивергенция.
4. Трендовая линия строится по максимальным экстремумам движения цены на промежутке, когда наблюдается дивергенция. Цена движется вниз.
5. Цена закрылась выше линии тренда, которая направлена вниз.
6. Входим в рынок (покупка) по цене Open следующей свечи после того, как была пробита линия тренда.
7. Stop Loss устанавливаем ниже локального минимума или под Low свечи, которая пробила трендовую линию (при этом размер свечи должен составить не менее 50-70 пунктов).
8. Take Profit не устанавливаем. Как только цена прошла в нашу сторону расстояние, равное величине Stop Loss, подтягиваем его в 0 и закрываем половину объема позиции.
9. Остальная часть сделки (50%) переводится на сопровождение трейлинг стопа, размер которого будет колебаться в зависимости от валютной пары и временного интервала. Примерное значение трейлинг стопа = размеру Stop Loss.
Важно: в случае появления новой дивергенции или прорисовывания более позднего экстремума на индикаторе CCI после того, как вы построили линию тренда – лучше еще раз нарисовать линию тренда и вернуться к п.3 или же удалить нарисованную линию и ждать новых сигналов.
При заключении сделки на продажу – условия зеркально симметричны.
Пример. EURUSD, M15.
Наблюдаем нисходящий тренд. По максимальным экстремумам рисуем нисходящую линию тренда цены. На графике осциллятора CCI по минимума откладываем восходящий тренд. Налицо дивергенция цены и индикатора. Ищем точку входа в рынок на покупку.
Свеча в 23.45 08.06.2022 закрывается выше линии тренда. Открываемся по цене Open следующей свечи = Close текущей свечи = 1,4582. Устанавливаем Stop Loss на уровне 1,4562 (локальный минимум).
В 03.00 09.06.2022 цена проходит расстояние, равное размеру Stop Loss – закрываем половину позиции (уровень 1,4602), подтягиваем Stop Loss в 0 (уровень безубыточности). На остальные 50% позиции ставим трейлинг стоп 15-20 пунктов.
В 08.45 того же дня на откате наша позиция закрывается по трейлинг стопу. Наша прибыль составила 29 пунктов. Общая прибыль равна 20+29=49 пунктов.
KT CCI Divergence Indicator
MT4 | MT5
Divergence is one of the vital signals that depicts the upcoming price reversal in the market. Manually spotting the divergence between price and CCI can be a hectic and ambiguous task that’s why we created the KT CCI Divergence indicator that shows the regular and hidden divergence created between the price and CCI oscillator.
Limitations of CCI Divergence indicator
Using the CCI divergence as a standalone entry signal can be risky. Every divergence can’t be interpreted as a strong reversal signal. For better results, try to combine it with price action and trend direction.
- Marks regular and hidden divergences between the price and CCI oscillator.
- Unsymmetrical divergences are discarded for better accuracy and lesser clutter.
- Support trading strategies for trend reversal and trend continuation.
- Fully compatible for embedding in Expert Advisors.
- Can be used for entries as well as for exits.
- All Metatrader alerts are available.
What is a Divergence exactly?
Generally speaking, if the price is making higher highs, then oscillator should also be making higher highs. If the price is making lower lows, then oscillator should also be making lower lows.
When this normal behavior is not followed, that means the price and oscillator are diverging from each other. There are two types of divergence:
How to Interpret CCI divergence indicator and Use it Effectively
Likewise, if the price on the chart makes consecutive lows, and on the CCI indicator, we see consecutive highs, this is also a CCI Divergence.
What is the CCI indicator?
The Commodity Channel Index (CCI) is a technical indicator. Donald Lambert developed the indicator in the 1980s. CCI or Commodity Channel Index is part of the standard MetaTrader 4 indicators . To use this indicator correctly, you need to understand its scope and features correctly.
Lambert created the indicator for working in commodity markets to identify cyclical reversals. The basis for the creation of CCI was the theory of cycles. CCI compares current prices with the average over a specified time interval. The author himself recommended using a period equal to 1/3 of the full period. This means that an asset forms local highs every 90 days (full cycle), then it is better to take a period of 30 days.
Calculation of CCI indicator
CCI = (Typical Price – SMA) / (0.015 * Mean Deviation)
Let’s analyze it in more detail.
- Find your typical price. To do this, add the high, low, and close price of each bar and divide the price by 3.
TP = (HIGH + LOW + CLOSE) / 3
- Calculate the n-period simple moving average of typical prices.
SMA (TP, N) = SUM (TP, N) / N
Индикаторы Форекс — Wildhog nrp + divergence | Подробный разбор
- Subtract the resulting SMA (TP, N) from the TP prices of each of the preceding n periods.
D = TP – SMA (TP, N)
- Calculate the n-period simple moving average of the absolute values of D
SMA (D, N) = SUM (D, N) / N
Understand Divergence With ACTUAL Trades in Under 8 Mins!!
- Multiply the calculated SMA (D, N) by 0.015
Стратегия форекс CCI Divergence Trend Line
M = SMA (D, N) * 0.015
- Divide M by D
HIGH – the maximum price of the bar;
LOW – minimum bar price;
Стратегия форекс CCI Divergence + Trend Line
CLOSE – closing price;
SMA – Simple Moving Average;
N – the number of periods used for the calculation
Of course, to plot CCI on a chart in the MT4 terminal, it is unnecessary to know all this. But for a better understanding of what exactly this indicator shows, it is necessary to understand how it is calculated.
How do you interpret CCI indicators?
The CCI was designed to identify overbought and oversold levels. The CCI indicator does this by measuring the relationship between price and a moving average, or more precisely, the normal deviations from that moving average.
High values of the index indicate that the price is unusually high compared to the average, while low values indicate that it is too low. This indicator looks like a line fluctuating in the range from about +300 to -300. Unlike many others, this indicator has no limitations, so readings can sometimes go beyond these conditional boundaries of 300 points.
The CCI is located in the MetaTrader4 terminal in a separate window below the price chart. The settings are simple – the period and the price to be used in calculations. The purpose of the indicator is to determine the moment of a trend reversal . The oscillator line moves from 0 to +100 in a bullish trend and from 0 to -100 in a bearish trend. The green boxes in the figure below show a bullish trend (0 to+100), while re boxes show a bearish trend (0 to -100).
Analysis to identify long-term trends is best done on weekly and monthly charts. This allows us to assume that the breakout of the levels +100; -100 will indicate a long-term trend.
The nature of the movement of the indicator from the level of 0 to +100 and from 0 to -100 prompts the future price movement. If the indicator line during this period is sharp, rapid, then a strong rise/fall can be expected. If the indicator line is flat and hardly overcomes the level, this indicates the movement’s outcome.
If the indicator stays between the levels +100 and -100 for a long time, then the market is flat.
For more risky trading, the following signals of the CCI indicator can be used as an entry:
- To buy, the breakout of the -100 level from the bottom up; to sell the breakout of the level +100 from top to bottom.
These levels are taken as levels +250 and -250 or +300 and -300. It all depends on the volatility of the asset. To do this, you need to select the settings for each currency pair individually.
When determining volatility, CCI rarely grows on its own and shows false signals that can be avoided by combining it with indicators, for example, with ADX.
- When the mark of the indicator goes beyond -100 and +100, it is overbought or oversold.
- When the price chart is in an overbought position, crossing the 100 line from top to bottom, it means that its decline is expected soon.
- When the price chart is in an oversold position, crossing the -100 line upwards, this means that it is expected to rise soon.
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Divergence is considered one of the strongest signals of any oscillator. Explicit divergences and convergences are formed much less frequently than just entries into overbought and oversold zones; therefore, they are more reliable as a signal.
Divergence sell signal
Convergence and divergence trades are opened as follows:
Стратегия форекс CCI Divergence + Trend Line
If, in an uptrend, the last local high was higher than the previous one (the line connecting them is directed up), and the last local low of the indicator is lower than the previous one (the line is directed downward), a sell position can be opened.
If the last low is lower than the previous one in a downtrend, and the last bottom on the indicator is higher than the previous one, a buy trade can be opened.
You can also exit trades by Commodity Channel Index signals – when the indicator line crosses the opposite level. Each trade must be protected by a stop loss (set at a local low/high or a key level).
CCI Divergence Trading Strategies
What is the fundamental factor in deciding when a currency starts moving for most professional Forex traders? The answer is unequivocal – indicator divergence.
This is one of the best strategies that has proven itself at various intervals. But it is best used at M15 and above. The CCI indicator formula is an indicator (indicator) of the signal that follows the trend in case of too large divergence of the last price compared to the moving average.
The divergence of the price shown by the CCI indicator and the one shown on the chart is Divergence. It shows the sequence of price lows with the consecutive highs displayed on the chart. And vice versa.
What needs to be done when entering the market according to the rules established by the CCI forex strategy? If the price divergence is high enough, the trend is considered established, and the CCI indicator follows the trend. The most commonly used strategy is when the CCI indicator crosses the zero mark or the level with marks (+100) (-100).
At the same time, it is worth noting if the features of the CCI indicator:
1. If it rises very quickly in the range from 0 to 100, it means a great strength of the trend.
2. Conversely, a rapid fall of the indicator after level 100 reached indicates a fall in the trend. And at this point, it is better to stop to protect income.
You can use CCI indicators on monthly, weekly, and daily charts:
- The monthly indicator allows you to set a certain period during which the periods of entering and exiting the market are set. This allows you to choose the most effective strategy.
- The weekly indicator works similarly to the monthly one. That is, you need to exit when the CCI indicator shows a peak, and the alternative one indicates a decline in the trend.
- The daily indicator has one very significant drawback – it is slow. For this reason, it misses the beginning of strong trends, which is a negative factor in trading in volatile and fast markets. For successful trading on Forex markets using the CCI indicator, it must be combined with other indicators, such as ADX.
Which indicators you can combine with CCI
You can use trend indicators with the CCI that may be used as a tool for confirmation. Since CCI is an oscillator, other oscillators like RSI or MACD are not recommended to combine with it. You can use a 20-period simple moving average with CCI. If the CCI indicates a bullish reversal, look for the price and 20 SMA. If the price is above 20 SMA, then the trade can be considered a high probability entry.
CCI is an oscillator that warns in advance of a likely trend reversal when analyzing price dynamics. Thanks to this, it makes trading much more productive.
CCI is one of the most effective binary options tools. It is widely used in trading, as it allows you to increase your odds of success.
The principle of operation of CCI is based on the cyclical nature of the market, and by correctly defining the cycles, you can see when the trend begins and ends, which allows you to win more positions.
This indicator can be freely used both for detecting long-term trends and for looking at reversals. However, not all assets will fit the standard settings.
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Multi indicator divergence
The indicator identifies when a divergence occurs between price and an indicator or oscillator. It identifies bullish and bearish hidden or regular (classical) divergences.
- Can detect divergences for the following indicators/oscillators: MACD, OsMA (Moving average of Oscillator), Stochastics, RSI, CCI, RVI, Awesome (AO), ADX, ATR, OBV, MFI, Momentum and Composite index. Only one indicator/oscillator can be selected per chart.
- Draws solid lines for regular/classical (potential reversal) divergences and dashed lines for hidden (trend continuation) divergences. The lines are drawn on the chart as well as in the indicator window.
- Indicator/oscillator to use: Default is Stochastics. You can select from any of the above mentioned indicators/oscillators.
- Divergence candle shift (must be 0, 1 or 2): Set to 2 for a stronger confirmation of the possible reversal/trend continuation (confirmed divergence). By having it set to 1 you will catch the possible movement earlier (unconfirmed/pending divergence). On the other hand, the signal is less reliable. You can also set it to 0 for catching «early» divergences. This means that the alert will come directly upon candle open instead of waiting for the slope in the indicator to change direction (candle shift 1 or 2), which means that the price must show at least some sign of reversal. Please be aware though that this will lead to more false signals (repaintings). Higher values than 2 are not supported.
- Bars to check (divergence depth): Bars back in time to check for a divergence. Default is 28.
- Max history bars: Bars back in time for which to draw divergences. D efault is 500.
- MACD OsMA AND AWESOME SETTINGS
- Fast MA: Default is 12.
- Slow MA: Default is 26.
- Signal MA: Default is 9.
- Period: Default period is 10.
- K: Default is 10.
- D: Default is 3.
- Slowing: Default is 3.
- Price type
- ADX period
- Line mode
- RSI slow period
- RSI fast period
- Momentum period
- Average period 1
- Average period 2
- Average period 3
- Price type
Стратегия форекс CCI Divergence + Trend Line
Please check out my other divergence products:
De todos os indicadores free que usei até hoje, esse é de longe o melhor de todos! Com ele dá para um iniciante se tornar lucrativo principalmente no mercado de Binárias; acho ele muito bom para Binárias e no tempo de 5 minutos, com velas de 5 minutos. Se o trader tiver um bom gerenciamento é bom, mas, sem gerenciamento adequado pode quebrar a banca. Já usei milhares literalmente de indicadores free, esse é o único que se salva.
Of all the free indicators I've used so far, this is by far the best one ever! With it, a beginner can become profitable mainly in the Binary market; I find it very good for Binaries and in 5 minute time, with 5 minute candles. If the trader has good management it is good, but without proper management it can break the bank. I've used literally thousands of free indicators, this is the only one that gets saved.
It is CCI indicator with very smooth and noiseless movement that calculates four levels of buy, sell, overbought and oversold dynamically. Professional traders know well that level of 100, 200 or -100 and -200 are not always right and needs fine adjustments. This indicator calculates those levels dynamically by using mathematics and statistic methods in addition to shows divergence between indicator and price.Честные Форекс брокеры этого года:
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