How to trade with CCI – Commodity Channel Index.

Commodity Channel Index (CCI) created by Donald Lambert in 1980, for to analyze the cyclical of the market.

What are the uses of Commodity Channel Index ?

Indicate breakouts levels in trending market

To buy when the Commodity Channel Index moved above +100 and to sell when the Commodity Channel Index went below -100. Exit the trade or make profit once the Commodity Channel Index moved back within the -100 to +100 bands. The assumption is that when CCI breaks the levels 100 and -100 it has begun trend.

Range market trading with CCI

Sell signals are when the CCI moves from above +100 to below +100 and buy signals are when the CCI moves from below -100 to above -100.

Divergence trading with CCI

Bearish Divergence occurs when prices are making higher highs but the CCI is making lower highs. This is a sign that the up move is weakening.

Bullish Divergence occurs when prices are making lower lows but the CCI is making higher lows. This is a sign that the down move is weakening

Example trading CCI breakout strategy.

CCI breakout with martingala on daily chart.

Setup chart

Time frame daily,

CCI 5 period,, close.

Currency pairs: any.

Buy CCI> +100

SellCCI<-100

Profit target ratio 1:1 stop loss. In this example 40 profit target 40 pips and stop loss 40 pips.

Martingala with multiplier from 1.4 to 2.0. In this example is 2.0.

This is a demonstrative example to apply only on demo accounts to practice using the CCI.