CCI Template MTF is multi time frame momentum indicator that aims to profit from the reversal of trends in markets. The idea behind this system is to trade the early reversal when an ongoing trend matures & starts to lose momentum.
CCI Template Mtf Indicator Overview
This strategy we can often get the huge risk to reward ratios because we are getting into a reversal early which means we can typically keep our risk unit small and our profit potential quite large. Let’s try to understand the working of this trading system with few examples.
Commodity Channel Index is a momentum-based indicator that helps to determine whether the market is overbought or oversold. Commodity Channel Index is not a banded indicator like RSI, the value of CCI can go above 100 or below 0.
Also Read: Daily Pivot Points
CCI Template Mtf Indicator Explanation
If CCI is positive then prices are in uptrend and if CCI is negative then prices are in downtrend. When CCI Reaches +100 levels it means up trend is near its maturity level and the market can reverse.
When CCI Reaches the 100 level it means the downtrend is near the maturity level and the uptrend can start. Further Moving average if 15 are applied on CCI indicators which act as a filter for the trading signals.
When prices make a higher high and CCI makes a lower high, it’s called simple divergence which is a bearish signal. When prices make lower low and CCI makes higher low it’s called simple bullish divergence which is a bullish signal.
Divergence is a signal that the recent strength of the price trend is reducing. Traders should look for taking trades only after divergence signal on CCI.
CCI Template: Buy conditions
- Price is forming lower high and lower low structure.
- CCI Histogram is negative and has given breakout from – 100 level.
- Simple bullish divergence on CCI and price
- CCi gives closing above the -100 level and 15 moving average.
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CCI Template: Sell conditions
- Price is forming higher high and higher low structure.
- CCI Histogram is positive and has given breakout from 100 level.
- Simple bearish divergence on CCI and price.
- CCi gives closing below the 100 level and 15 moving averages.