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The British Pound Breakdown. Commodity Channel Index CCI is an oscillator introduced by Donald Lambert in Though its name refers to commodities, it can also be useful in equities and currency trading as well.

CCI measures the statistical variation from the average. Traders use the CCI in a variety of ways. Three common uses are: This article will be the first of three regarding common uses of CCI and will focus on how to use this oscillator in retracements.

Timing Trades With The Commodity Channel Index

Therefore, if values stretch outside of the above range, a retracement trader will wait for the cross back inside the range before initiating a position. First identify the direction of the prevailing trend. If you are trading off of a 4 hour chart, determine the direction of the daily trend. If you are trading off a 15 minute chart, determine the direction of a trend on the 2 hr chart. If the trend is up, wait for the CCI to move below oversold territory and cross back above to create a buy signal.

Place your stop loss just below the swing low. Look to take profits at least twice the distance to your stop loss so you are maintaining at least a 1: Place your stop loss just below the swing high. Breakout Trades and the Power of Price Channels 17 of How to Identify Positive Risk-Reward Ratios with Price Action.

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