Commodity Channel Index – refers to the kind of oscillators, which are equipped with many types of terminals for binary options trading. At its core, said indicator is an index of commodity channel and was originally used to define areas of possible price reversal.
Today, CCI, is a part of many trading systems, in which it plays a major role, giving early signals of changes in price trends.
Indicator bar contains two levels, which are fundamental in the work of the indicator - namely, the levels of "+100" and "-100". In fact, these levels are critical areas for indicator, and display zones of the asset price quotes entering the overbought – oversold zones.
Signals for trading off CCI
- when the indicator line goes beyond the level of - 100, which means the occurrence of the overbought point in the price channel formed by the price movement, suggesting a possible reversal of asset quotes. Thus, when the price comes beyond the level of - 100 and turns around and breaks through it in the opposite direction - it is a clear signal to buy (Call-option). When the line comes in Zone 100, turns around and breaks through it in the opposite direction - it is a clear signal to sell (Put-option).
- when the line crosses the "0" scale of its own window - it is a signal of trend change and the start of the instrument transition from overbought to oversold condition, and vice versa.
CCI implementation specifics
CCI refers to the type of oscillators which is undesirable to use in trending markets. Since half of its signals will be unprofitable. This is particularly important due to the fact that CCI cannot determine the overall slope of price quotations movement.
However, in conjunction with other indicators that show the trend, CCI will serve as an excellent indicator by which you can identify any short-term changes in the financial asset market trends.
Additionally, CCI is suitable for use in any of the assets available in the binary options trading terminal. CCI indicator is excellent for the long term chart timeframes as well as for shorter term timeframes.