Forex Indicators: Momentum Indicator

Oct — 9 — 2013

forexlearner

Forex Indicators: Momentum Indicator

We use different indicators in Forex to assess the market condition among these the most important is Momentum indicator.

Momentum Indicator:

2.rsi

3.CCI

4.Accumulation swing index(ASI)

5.Stochastic .

These are all important Momentum indicators.

Commodity Channel Index (CCI):

It is a very popular indicator among Forex traders. When traders trade, they always look for this indicator. There are many types of CCI indicators. There are many trading systems with CCI and those are very easy.

CCI was created by Donald Lambert. This indicator is created to understand the bullish and bearish condition of the market. It can also find the strong and weak position of the market. CCI consists of +/- 200 single lines.

It can be used in trade in various ways. When CCI reaches +/- 100 levels, then you have to take buy or sell entry. When CCI reaches above 100 it shows strong uptrend. Traders can open buy position. Until and unless it is above 100, trade has to be opened. If it goes below 100, trade has to be closed.

If CCI level is below -100 level, then sell. If it crosses -100 levels, then you have to close the trade.

CCI and its Zero line

There is another way to trade with CCI, which is called zero line. It is a very aggressive strategy.

When CCI level crosses zero, then we think about buying, since the market is in uptrend.

When CCI level crosses zero and goes down, then we think about selling, since the market is in downtrend.

In short,

When zero up, buy area

When zero down, sell area

 CCI overbought & oversold zones

Based on the CCI levels, we can divide the indicator into 3 parts and trade:

• Above 0 (zero) is bullish, below 0 (zero) is bearish.
• If CCI level is above 100+ then the area is overbuy, and if CCI level is below 100+ then the area is oversell.
• We have to understand if the rate enters into overbuy and oversell area. Overbuy area represents buy and oversell area represents sell. When market bar reverses, we have to close the trade.
• If CCI level is above extra 200+ then the area is overbuy, and if CCI level is below extra -100 then the area is oversell.

Now you can give trade entry with CCI through various ways.