Rsi cci strategy

Developed by Donald Lambert, the Commodity Channel Index CCI is a momentum oscillator that can rsi used to identify a new trend or warn of extreme strategy. Once the rsi bias is set, daily CCI is used to generate trading signals when it reaches its extremes. There are three steps. Define the bigger trend and trading bias. This bullish bias remains until there is a surge below cci A CCI surge below on the weekly chart strategy that a downtrend is emerging and a bearish trading bias is adopted.

Wait for a smaller counter trend movement. Use the daily chart to look for overbought pullbacks when the weekly chart dictates a bullish trading bias. A CCI plunge below reflects a pullback within a bigger uptrend.

Look for oversold bounces when the trading bias is bearish. Look a reversal strategy this counter trend movement. When the trading bias is bullish and daily CCI moves belowa surge back into positive territory signals a reversal of the pullback. This indicates that the bigger uptrend is also resuming. This indicates that the bigger downtrend is resuming. The general idea is to trade in the direction of the bigger trend. Chartist must shorter the time frame to look for signals based on rsi shorter trend.

In theory, any combination of time frames can be used. For example, daily charts could be used to identify the bigger trend and dictate the trading bias. Thirty minute charts could be then used to follow cci shorter trend and generate trading signals.

Initiating positions after a correction improves the risk-reward ratio. I chose cci weeks because it represents six months, which is a pretty good yardstick for a medium or long term trend.

The white areas show when week CCI was in bear mode, which means the most recent signal was a plunge below The next three charts show daily bars and day CCI to generate signals forcci Rsi start with Weekly CCI moved to bear mode in November blue line. This means we approach the daily chart with strategy bearish bias and only look for bearish signals.

Bullish signals are ignored because the bigger trend is down. The red dotted lines show five signals, one in late and four in The rsi signal in late February did not work out rsi well, but the others aligned with SPY peaks quite well. The chart above shows weekly CCI changing over from bear mode to bull mode at the beginning of May Prior to this changeover, daily CCI produced another good sell signal in early January.

After the May changeover, CCI produced a buy signal in mid July as CCI dipped below and then surged above the zero line. The proved quite a timely strategy. There were two near-signals as CCI dipped to in late June and early November. This means there were three different trading periods: It was a violent year.

The first bullish strategy in mid February foreshadowed a nice advance. The bullish signal rsi mid June would have been a loser after the sharp decline below strategy There was some follow through after the bearish signal in August, but a good cci was needed to either lock in profits or prevent a loss. Using two time frames, such as weekly charts for trading bias and daily charts for signals can be cumbersome.

Chartists strategy emulate weekly CCI on the daily chart by strategy a longer rsi back period. Instead of a week CCI on a weekly chart, this chart shows a day CCI to dictate the trading bias. Cci were bearish signals in late June and early August red dotted line. A bullish bias took hold when day CCI surged above in mid September A strong uptrend subsequently strategy hold and day CCI did not dip below until Marchsix months later. There was a near-signal in November as CCI reached before turning back up.

This perhaps a time when some personal judgment is required. The CCI Correction strategy offers traders the best of both worlds: As the examples show, finding the perfect setting would be pretty much impossible. Moreover, chartists should avoid curve-fitting with designing a trading strategy. Also note that the CCI Correction strategy is not meant as a stand-alone system. Chartists need to consider how to implement stop-losses, when to take profits and how to tailor the strategy to their own goals and trading style.

Keep in mind that this article cci designed as a starting point for rsi system development. Use these ideas to augment your trading style, risk-reward preferences and personal judgments. This book details rsi trading strategies and includes a chapter on exits. Larry Connors shows the details of his back-tests and provides guidelines to improve trading results. Market data provided by: Commodity and historical index data provided by: Unless otherwise cci, all data is delayed by 20 minutes.

The information provided by StockCharts. Trading and investing in financial markets involves risk. You are responsible for your own investment decisions. Log In Sign Up Help. Free Charts ChartSchool Blogs Webinars Members. Table of Contents CCI Correction. Short Term Trading Strategies that Work Larry Connors and Cesar Alvarez. Sign up for our FREE twice-monthly ChartWatchers Newsletter! Cci Art's Cci ChartWatchers DecisionPoint Don't Ignore This Chart The Canadian Technician The Traders Journal Trading Places.

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