This movement confirms the trend, the market is to be entered here. In most cases, when its price turns green, an assets price is usually trending. On the other hand, when it turns yellow, it means that the trend is developing. Finally, when it is red in color, it shows that there is no trend. The Woodies CCI indicator reveals various patterns that can help traders make informed decisions.

  • Here, you do not need to think too much as when trading classical graphic patterns, say.
  • Zero line is also merged with LSMA indicator which shows if the price is below or above LSMA (a moving average designed for Woodies CCI).
  • You need to get a feel for the system and especially a sense for the early recognition of the chop.
  • The Woodies CCI will appear on the right side of the list of analysis tools.

The horizontal line is drawn till the level 100; a breakout of such a line provokes further price movement along with the trend. A strong signal will have more than two peaks before the breakout. You may enter the market on the candlestick that follows the breakout of the horizontal level. Moreover, you do not have to predict price movements by thus indicator only. Also, the system does not offer levels for the Take Profit, however, it is an advantage when trading the trend because no one can tell how much the price may drop or grow. Meanwhile, it is recommended to place the Stop Loss as close to the price as possible, its size depending on the entry point.

Exiting the position by Woodies CCI

You can draw a trendline on the CCI histogram the same way you do it joining the lows or the highs of the price bars. The most favouring situation is when the bars go beyond 200 values, as the movements are then stronger. Your task is to observe the breakout from the trendline. This is a very basic signal you can obtain from the Woodies CCI indicator.

Zero line is also merged with LSMA indicator which shows if the price is below or above LSMA (a moving average designed for Woodies CCI). Red areas of the indicator signify that the price is below LSMA; green areas, above. Here, we draw a trendline based on the movement of the indicator inside the last impulse. A breakout of such a line will signal the end of the impulse, which will be a good chance for us to exit the market at the highest prices. Note that this signal may also advise entering the market.

The Woodies CCI Strategy: Trading Without Price Charts

You can assume there is an uptrend when the bars are green and above the baseline. Any information contained in this site’s articles is based on the authors’ personal opinion. These articles shall not be treated as a trading advice or call to action. Financial analyst and successful trader; in his practice, prefers highly volatile instruments.

Indeed, it is not provided as a default by most trading platforms, including the MetaTrader. To use it, you need to download and install it from the marketplace. Second, if the price is trending, you should focus on the centreline. A bullish trend is confirmed when the CCI line and the histograms move above the neutral line, as shown in the chart below.

GENERAL RISK WARNING

Some key patterns include the Zero Line Reject, Trend Continuation, and Divergence. This difference is then divided by the mean absolute deviation (MAD) to create an oscillator that fluctuates around the zero line. Supporting documentation for any claims, comparison, statistics, or other technical data will be supplied upon request. TD Ameritrade does not make recommendations or determine the suitability of any security, strategy or course of action for you through your use of our trading tools.

The chop zone, on the other hand, is plotted on the +100 and -100 levels to visualize the difference in between close price and its EMA. Its colors are yellow, lime, light green, dark green, cyan, light orange, dark orange, light red, and dark red. To use this signal, traders should look for the CCI line to cross above or below the zero line and wait for confirmation before entering a trade. Confirmation can be in the form of a candlestick pattern, such as a bullish engulfing pattern or a bearish harami pattern. Sometimes they go beyond the level of -200 or 200 and then quickly reverse. This reversal forms a V-shaped bottom or top and signifies a correction in the prices.

How to use the Woodies CCI indicator

However, if you see some unusual signals from Woodies CCI, try using them. Such a line is drawn through pronounced peaks as an ordinary trendline. The best entry point is a breakout of the trendline as close to the zero line as possible, which will also be an additional signal of a bounce.

Symbol Changer Indicator

We’ll talk about the Woodies CCI strategy in the next article. Woodies CCI indicator is a modification of CCI (Commodity Channel Index). The indicator consists of two CCIs with the periods 6 and 14. A fast curve is used to predict the slow one’s movement.

We will explain the rules for opening positions and the options for setting Stop Loss and Take Profit. The latter is an indicator that was created by Donald Lambert to identify cyclical turns in the commodities market. It measures the current price level relative to its average price over a given amount of time. There are other parts of the Woodies CCI indicator known as sidewinder and chop zone.

Trading foreign exchange on margin carries a high level of risk, as well as its own unique risk factors. Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Prior to trading options, you should carefully read Characteristics and Risks of Standardized Options.

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