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the interpretation and application of price action concepts

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Trading the CCI with examples by australia flag.gif (364 octets) FITZY...... thanks Fitzy...NQoos

back to CCI Setups   CCI Tips and Nuances by Goinglite 


Here is a simple and concise interpretation of how to trade with CCI. It comes from Fitzy, across the pond in Australia. These charts come by courtesy of Steve Fitzsimmons, Fitzy40. 

If you have comments or questions for Fitzy and how he trades CCI you can go there. You can also find Fitzy trading at night on Paltalk.

Fitzy gives great advise when he says "It does not work for everyone. Trades are taken at your own risk. The examples included have been chosen to show the set-ups. Set-ups donít always work. They are a guide only.

This is always the case with valid trading methods. 

I personally do use CCI on one of my screens that I trade from. The most important factor is screen time. Learning the nuances of a setup/indicator will allow you to become a consistent profitable trader. Six variations of using CCI are presented here by Fitzy. If you master just one you can be consistently profitable. My advise is to do exactly that. Master one setup, then add another setup or another indicator to tweak the setup.


Trading the CCI with examples by FITZY

The following is a list of set-ups  and my interpretation of them. It is up to individual traders to make a workable trading plan from them. 


Example 1.
The CCI that is used is a standard 14 period (black). There is also the turbo CCI that is a 6 period CCI (red) overlaid on top of the 14 period CCI.  



This list is not the holy grail but it is somewhere for new traders to the CCI to begin. The set-ups can be used with either 14CCI or turbo CCI or a combination of both. The CCI can be traded a number of different ways such as:

1) Regular Divergence (against the trend)
2) Reverse or Hidden Divergence ( with the trend)
3) Trendline breaks on the CCI indicator
4) Zero line rejections or crosses
5) The slingshot pattern (via Buffy and Jimmer)
6) Extreme trades

These set-ups can be used on any time frames. Others can be used depending on your trading style. 


Example 2  back to index
The trend on the CCI is determined by the zero line. If you have more than 5-6 bars above zero the trend is up and vice versa for down. 



I will now explain the set-ups and my interpretation of them:-

Example 3   back to index
1) Regular divergence set-ups use 3 Ė 10 bars. The trigger is when the 14 CCI crosses the 100 line. The divergence must occur above or below the 100 lines on the indicator and the best ones occur at an extreme reading of 200 or more. Remember these set-ups are against the trend. 


Example 4  back to index 

2) Reverse divergence set-ups use 3 Ė 12 bars. They can occur anywhere and they are the stronger divergence set-ups as they are with the trend. Use a trendline break or a zero cross as the trigger. 




Example 5  back to index

3) Trendline breaks occur on the CCI indicator not on the price. The best ones have well defined peaks and valleys and the more touches of a trendline the stronger they are. They should always start from outside the 100 lines. My favorite ones are with the trend. Others with high win % are when they occur at the zero line. 



Example 6  back to index
4) Zero line rejections occur when the CCI comes up to or goes down to the zero line then hooks and goes back in its original direction. These are best with the trend. 


Example 7  back to index
5) The slingshot pattern is when the 14 period CCI rejects the zero line and the turbo CCI hooks at around the 100 line. Trigger is the hook of the CCI. 




Example 8  back to index
6) Extreme trades occur over the 200 lines. The win % on these trades is not as high as others and filters can be used depending on your trading style. 



There are other set-ups as well and this is a document in progress. All comments are welcome.

Lots of traders have trouble with exits. There are a number of ways to exit using the CCI, some of these include:-

1) CCI hooks
2) Trendline breaks
3) Extreme reading
4) 100 line crosses


This document is basic, all I have tried to do is give new traders to the CCI something to work with and develop their own trading plan from.

One general rule I have is this "Beware of taking CCI setups when the CCI is flat and zigzagging back and forth"

All comments welcome. My email is trumpfs@bigpond.net.au (Fitzy's email address)

It does not work for everyone. Trades are taken at your own risk. The examples included have been chosen to show the set-ups. Set-ups donít always work. They are a guide only.



Cheat Sheet for Divergence Trades

CCI PRICE

Regular Divergence (against trend)
Lower High Higher High = Short
Higher Low Lower Low = Long

Reverse or Hidden Divergence (with trend)
Lower Low Higher Low = Long
Higher High Lower High = Short

Here is a divergence chart based on Fitzy's guide below:





Fitzy40 trumpfs@bigpond.net.au

 

 

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