Modified Commodity Channel Index Forex Indicator
The CCI_ indicator for MetaTrader4 is a modified version that of the original “Commodity Channel Index”. The original creator of the indicator is Donald Lambert and he used it to gauge the difference between a currency’s mean price and the average of the mean price over a specified period.
The CCI indicator can be used in determining overbought and oversold forex market conditions, along with the beginning and ending of cycles in the fx market.
The CCI_ indicator is an “oscillator” due to the fluctuations that is seen in its values between “80” and “-80”. The CCI_ indicator has its lines drawn at “80” and “-80” warning signals values.
When the values of the CCI_ indicator exceeds this boundary limits, traders interpret them as strong overbought conditions i.e. a bearish signal when above the “80” level, and if the CCI_ indicator curve falls below the “-80” level, the market is said to be in an oversold condition i.e. a bullish signal is in the making.
When to Possibly Buy:
Buy when the CCI_ indicator crosses below the -80 level and has shown that it is curving upwards.
If there’s a bullish divergence between the CCI_ and the actual price action, depicted by upward move in the CCI as price of the pair continues to dip lower or sideways.
When to Possibly Sell:
Sell when the CCI_ breaks above the 80 and has started to dip downwards.
If there’s a bearish divergence between the CCI and the real price movement, where the CCI_ is in a downward movement while the price of the forex pair is going higher or sideways, it is a signal for a buy.
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (Description1, InpScaleFactor, InpMaPeriod, InpVolatilityPeriod, Description2, InpCCIPeriod), Colors, width & Style.
Time frames: Any