One of the most popular indicators in Forex trading is the Commodity Channel Index (CCI). It is used to detect possible trend reversals or divergences between currency prices and their statistical average price over time. It shows the weakest and strongest periods, as well as turning points.
The oscillator is also useful to determine if an asset pair is too overbought/oversold. The value of the indicator can range from +100 to -100. Indicators above the +100 level indicate overbought prices. Above -100 indicates that the area is oversold.
If the price has been running for a long time, it is overbought. As buyers close their winning trades, sellers will likely take over the market. This is the key point. If the market is overactive, a price correction is very likely.
Download free mt4 commodity channel indicator – this is a valuable tool for both experienced and novice forex traders. It helps beginners to determine the ideal entry and exit points. Experienced traders can also use the indicator to identify divergences.
MT4’s CCI indicator has no boundaries. It does not have a fixed high or low value. Care must be taken when identifying areas that are overbought or oversold. Oversold/overbought zones are usually set to 100 and +100 respectively.
Buy and Sell Signals Commodity Channel Index
The center line represents a neutral or zero point. areas above the 0 line represent buy areas and areas below the 0 line are sell areas. You should look for buying opportunities. When the price crosses the overbought or oversold area, you should expect a price reversal.
Conclusion
The indicator of the commodity channel is a great oscillator to identify the right buy and sell positions. It will tell you if it is best to ride the trend in strong momentum or if you should prepare for a trend reversal. CCI, like most indicators, should be used in conjunction with other tools to identify market entry opportunities and establish confluence points.
