Forex Strategy Trend Line + CCI Divergence — as we know, almost all professional traders in financial markets often use the Divergence of different indicators to decide on the conclusion of a transaction, so we are now and consider a very simple but very effective strategy for forex, which is based on Divergence indicator CCI, predicting about trend reversal (or temporary roll back) prices in the forex market in the near future.
- This strategy works well on any interval, but it is desirable to use the above M15.
- On the schedule for the chosen currency pair (which may be the same — any) set MT4 indicator — FX Sniper’s CCI (14)
First of all, let’s see what we assume the divergence indicator CCI in this strategy.
Examples of divergence CCI look at the figures:
Divergence — is tence other than the price difference on the chart and the indicator CCI. If the price on the chart makes successive highs, and the indicator shows a successive minima — this is the divergence of CCI.
Similarly, if the price on the chart makes the successive minima, and the CCI indicator we see successive peaks — this is also the divergence of CCI.
Now let’s consider the conditions under which we will enter the market under the rules of forex strategy CCI Divergence + Trandeline.
We conclude deals for:
1. Determine the trend and note that the trend is down at our chosen time-frame (the price makes successive minima)
2. We are witnessing the divergence of CCI at our chosen time-frame.
3. In the second extreme of CCI closed for at least 1-2 bars after the formation of divergence.
4. Building a trendline from the maxima of the price movement downward in the interval of divergence.
5. Price closes above the trend line downward, constructed from the maxima points, located the interval under consideration divergence.
6. We conclude the deal on the opening price the next bar after the penetration of the trend line.
7. Stop-loss is placed below the local minimum in the near or under the candles to penetrate the trend line (if it is at least 50-70 points).
8. At a distance equal to the size of stop-loss position in translating bezubytok and close 1 / 2 a position.
9. Forward the remaining 1 / 2 trading position on the trailing stop (trailing size depends on the chosen currency pair and time-frame in which you trade, but about its value must be equal to the initial stop-loss).
Note: if, after construction of the trend line, you saw a new divergence or surprisingly a later peak at the indicator CCI — should redraw the trendline and the follow items 3-6 (above) or remove it!
For transactions for sale — the reverse condition!
and this is another example of making deals on the divergence shown in Figure 1:
During the breakdown of the trend line 3rd divergence, if desired, stop-loss order can be placed not under the local minimum and a candle to penetrate the trend line. The 1 / 2 of the transaction would have closed with a profit, and the rest position closed on «zero».
Warning: Template MT4 and MT4 indicator prior to decompress!