How to Trade CCI Indicator

The CCI indicator is an oscillator technical indicator made in the 1980's and traded by many Forex trader to determine trading positions. CCI indicator can be traded in breakouts, trends and ranges trading. In this article I will show you how to use CCI indicator in trend trading reversal with oversold and overbought area.

In the chart above -100 is considered oversold and the +100 level is considered overbought. Knowing this system, reversal forex traders will wait for CCI indicator to trade outside of these levels and make new positions from the cross back inside the range.

In the example chart above using a 4 hour chart. As market price moving down with established bearish trend in place, Forex traders will opening short positions. The primary method of timing entries with CCI indicator in a bearish trend is to wait for the CCI indicator to trade above the overbought area and cross back below +100 level. This makes a chance to short the market price as momentum is returning back in the direction of the market trend. We can set our stop loss just under the swing high and set the profit at least twice number to your stop loss, risk and reward ratio 1:2.