Today I want to share with you a very simple trading system that is based entirely on CCI divergence. CCI is a pretty useful indicator in itself but it’s even more effective when you trade divergence patterns.
In trading circles divergence is basically where the price makes new highs but the indicator in question, ie the CCI in this case, fails to make new highs. Similarly in a downward trend the price is making new lows but the indicator is failing to make new lows.
These divergence patterns indicate that a reversal is about to take place because the trend is starting to run out of momentum, and they are generally very strong signals.
So getting back to the CCI divergence trading system, I recommend you plot the price chart along with two CCI indicators – the CCI (10) and CCI (60). You may like to try other settings but I find these work extremely well.
Then you want to wait for a divergence pattern to emerge on BOTH of these indicators. You can use just one indicator but I recommend using both of them if you want to identify the very best signals.
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I hope the above currency trading article was of help to you.
Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.