What is the CCI indicator...?
The CCI indicator is an oscillator that measures the strength behind a price movement. In its simplest form, it allows us to judge whether these forces are directed up or down. In this respect, the CCI Indicator has some similarities with the Momentum Indicator. The value of these indicators oscillates on either side of the "zero" line.
As the main difference, the momentum indicator is limited in the 100-point range on either side of the "zero value", while the CCI can swing between highs and lows, although 100 and -100 are still key values.
Like many indicators at the moment, the CCI compares the current price to a previous one, and from this comparison decides how strong or weak the market is in relative terms. The CCI uses a moving average as a reference point, against which the current price is measured.
CCI is a relatively recent indicator that emerged after the advent of computing. Therefore, it was designed for electronic processing from the start, unlike many previous indicators that were originally calculated manually. Thus, the calculation method is a little more complicated than that used in previous indicators. Also, slight variations have been added to this method over the years.
The CCI Indicator Trading Strategy...
◈ If we look at how the CCI is calculated, its main function is to tell us how a pair's price change at any time compares with the average price.
◈ A high CCI indicates price is above average. The CCI rising to these levels indicates an increase in strength.
◈ A low CCI indicates price is below average. The decline in the CCI to these levels indicates further weakness.
The trading rules suggested by Miller for his simple indicator...
◀ ️ If the CCI line reaches a value above +100, it is a signal for a buy position. It is advisable to close the position when the line crosses below +100.
◀ The same method is applied the other way, If the CCI line falls below the -100 level, then this is a sell signal, and therefore a short position opening is the most likely to happen. It is advised to close the short position when the CCI line rises above the -100 level.
Goo Luck To All ...