CCI or Commodity Channel Index is an oscillator type indicator used to measure the saturation level of prices (overbought / oversold). CCI indicator was first introduced by Donald Lambert, namely in 1980.
Actually,
this is the beginning of the use of specific indicators to determine
overbought area and oversold on commodity markets. But over time, this CCI indicator can also be used on other types of markets, such as forex.
Partially trader divide CCI into three zones are:
1. Zone Overbought
CCI value is regarded as zenuh zone is when the value of the CCI is above 100 .As with any other oscillator, after entering the overbought zone chart then the chart will return turun.Oleh therefore this area made the area sell.
CCI value is regarded as zenuh zone is when the value of the CCI is above 100 .As with any other oscillator, after entering the overbought zone chart then the chart will return turun.Oleh therefore this area made the area sell.
Central 2.Zona
When the value of the CCI indicator is located between -100 and 100 or bearada in the middle zone of market movements tend mendatar.Sehingga recommended for that use trending strategy not to open a position.
When the value of the CCI indicator is located between -100 and 100 or bearada in the middle zone of market movements tend mendatar.Sehingga recommended for that use trending strategy not to open a position.
3.Zona Oversold
If the indicator CCI below -100 enter the area then this means it has entered the zone oversold.Oleh therefore tend to rise further market direction.
If the indicator CCI below -100 enter the area then this means it has entered the zone oversold.Oleh therefore tend to rise further market direction.
Besides be used as price saturation level gauges, indicators Commodity chanel index can also be used as an entry signal provider. Here's how to use the CCI to look for entry signal:
1.
Signal Buy shown when cutting CCI -100 level from the bottom, on the
grounds that the price has just moved from oversold zone, so that the
direction of further rises.
2.
Signal CCI Sell indicated by the lines cut from the upper level 100,
with the new price reasons to leave the oversold zone therefore towards
further down.
Use
of CCI will be lefektif in a crowded market conditions or the
conditions of chaos in which the buyer and seller each purchase attacks.
On condition that a very strong trend CCI indicator is not functioning properly. Included on the deserted market but one party dominated (slow trend).
However, generally speaking buy signal and sell signal is generated CCI accurate. To cover the shortfall this CCI indicator we can pair it with other indicators.
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