The Awesome CCI Divergence Forex strategy uses hidden divergences and price action as a means to generate buy/sell market signals.
Trading divergence is a great price action technique that isn’t lagging behind real-time prices.
It is primarily used to trade market reversals with low risk stop loss.
Exploiting this market reversal pattern will help currency traders to stay profitable in the long-term.
We will be using this divergence pattern together with the Super Trend forex indicator for better performance.
MetaTrader4 Indicators: cci-divergence.ex4 (Inputs Variable Modified; CCI_Period=36), super-trend.ex4 (Default Setting)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Trade Example
Long Entry Rules
Enter a bullish trade if the following indicator or chart pattern gets put on display:
- If the cci-divergence Metatrader 4 forex indicator displays new highs between points C & D, while price is making new lows between points A & B, a bullish divergence is said to be looming (refer to Fig. 1.0) i.e. a trigger to go long on the designated forex pair.
- If the lime line of the super-trend custom indicator staysaligned slightly below the candlesticks as depicted on Fig. 1.0, the general market sentiment is said to be bullish, as such a buy alert will suffice.
Stop Loss for Buy Entry: Place stop loss below short-term support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit from all trades if the following rules or conditions takes precedence:
- If the cci-divergence custom indicator displays a bearish divergence during the course of a bullish trend, bulls power is said to be weaning, therefore an exit or take profit will do.
- If the color of the line of the super-trend forex indicator reverts to red while a bullish trend is running (see Fig. 1.0), it points to diminishing bulls power, therefore an exit or take profit is duly recommended.
Sell Entry Rules
Go short if the following setups gets displayed rightly on the activity chart:
- If the cci-divergence forex indicator displays new lows between points C & D, while price is making new highs between points A & B, a bearish divergence is said to be on the horizon as exemplified on Fig. 1.1 i.e. a trigger to go short on the currency pair of interest.
- If the red line of the super-trend custom indicator staysaligned somewhat above the candlesticks as illustrated on Fig. 1.1, the overall market sentiment is said to be bearish, therefore a trigger to go short on the selected forex pair.
Stop Loss for Sell Entry: Place stop loss above short-term resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If the cci-divergence custom indicator puts up a bullish divergence while a bearish trend is underway, bears power is said to be halting, therefore an exit or take profit stance is imminent.
- If the color of the line of the super-trend forex indicator reverts to lime in the face of a bearish alert as exemplified on Fig. 1.1, it is signaling weakening bearish market sentiments, therefore an exit or take profit is duly advised.
Sell Trade Example
About The Trading Indicators
The cci-divergence is a commodity channel index based divergence tool that shows when the current level is way above or below the moving average.
The moving average component can be modified by the trader.
The super-trend indicator is a trend following and non-repainting custom indicator that is based on CCI.