When trading, one of the most important pieces of information to have is the ability to identify momentum—when it begins and when it ends. It can help you plan your next trade and to ensure that that trade is successful. It is in the process of charting momentum that the Commodity Channel Index is especially effective, and that is regardless whether you are trading commodities, stocks or Forex. The rationale behind the Commodity Channel Index or CCI is that it is an oscillator memahami pergerakan harga forex measures the deviation from the simple moving average over the period.
Just like most oscillators, it has an overbought level and an oversold. If the CCI is relatively high then the pair is overbought and when it is relatively low, the pair is oversold. Dalam amalan, Walau bagaimanapun, using the CCI is a bit more complicated than the RSI. Unless the CCI is calibrated correctly it is practically worthless in identifying momentum cycles. Lebih-lebih lagi, without correct calibration, it can generate plenty of false signals. This will help us decide the right period in which to run the CCI.
In order to identify the beginning of the current cycle we can use Fibonacci Time Zones, which will give us an accurate measure. Sebagai contoh, when we look at the Fibonacci Time Zones in the weekly chart below, we can conclude that the current cycle started 36 weeks ago. The rule of thumb is to divide the total period by three to give the average a bit more sensitivity. That is the average the CCI should run on. The reason we use Fibonacci Time Zones to calibrate the CCI is because the cycle’s length changes from wave to wave as they become longer and consequently the relevant average changes.
Through the Fibonacci Time Zones, we can estimate with some degree of confidence when the cycle started. Analysing the CCIOnce the CCI is calibrated, the rest is simple. CCI, as previously mentioned, measures overbought and oversold levels. But rather than just looking at relative highs of the index we need to look at its behavior. Sebagai contoh, in the Gold chart below, we can see that the CCI is converging with the price movement. That is a clear sign that bullish momentum is fading.
USD, has already peaked and is heading lower in a bearish momentum. Another way to chart the momentum is by examining the CCI behavior between the Fibonacci Time Zones. Notice that the CCI has a tendency to bottom out when the cycle ends and then rise. We can use that to ride on a rebound. There are cases, especially on a long term bullish trend, that we can get the exact opposite effect, iaitu, the CCI peaks every time a Fibonacci Time Zone ends.
The idea is to observe the pattern and then use it to your advantage. Sudah tentu, as I’ve said in the past, oscillators should always be used alongside other indicators to get the full picture, and the Commodity Price Channel is no different. As usual in trading, there are no guarantees, but certainly the well calibrated CCI can provide a very coherent picture of where a pair’s momentum is headed, north or south. You also know the rule of thumb—that is that your profit should be at least twice the amount you are willing to risk.
But how can you know if the trade you’re considering really has potential that is worth twice the risk? The first dot has to be placed at the beginning of the first wave in our expansion wave and the third dot should be placed at the beginning of the second wave. Awas: One of the biggest pitfalls in the Fibonacci Expansion is the failure to recognize the second wave. After the Fibonacci Expansion has been drawn, we can see the various levels of possible resistance. It is important to notice that, Sesungguhnya, the various levels of Fibonacci are acting as resistance levels, especially the 61. If the Fibonacci levels and resistance levels do not align on key levels, the Fibonacci Expansion was drawn incorrectly. If the limit is more than twice the distance in pips to your stop loss, that is a confirmation that the trade is worthwhile.
Now you are left with a key decision: where is the potential limit for this trade? That will depend on your degree of conservatism, Dgn kata lain. If you have to place your limit on that level to gain twice what you are risking, you are taking quite a chance because there is no margin of safety. But if you set your limit at 161. One way to avoid such a pitfall is to use the second wave rule of thumb. Another way to minimize risk is to calibrate Fibonacci using Parabolic SAR.
The selloff in GBP pairs after Brexit presents a challenge for a trader. Since we are talking about multi-year lows, we cannot know when the bottom will emerge, because the pair is in uncharted territory. Again, we have no way of knowing when the momentum will change from vertical bearish movement to a trend to a possible range bound. So how do we handle those unknowns?