Inside Bar CCI Forex Trading Strategy

The Inside Bar CCI forex trading strategy uses the inside bar price action pattern in determining trend.

The strategy combines the envelopes and CCI MT4 indicators is adding weight to its signals.

Just about anyone can use this strategy to duplicate profits in the forex market.

Chart Setup

MetaTrader4 Indicators: Envelopes.ex4 (default setting), CCI.ex4 (default setting)

Preferred Time Frame(s): Any

Recommended Trading Sessions: Any

Currency Pairs: Any

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Buy Trade Example (Click the image for full size)

inside-bar-cci-forex-trading-strategy

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy if the following rules or conditions are true:

  1. If an inside bar price action pattern forms, it is usually a sign that price is about to breakout from a congestion zone. Following this lead, we’ll have to wait for “Rule 2” & “Rule 3” to confirm if it is a buy.
  2. Following the formation of an Inside Bar, if a bullish candle opens and closes above the upper green line of the envelopes indicator, it is a signal that price is pushing higher i.e. a bullish trend.
  3. If the green line of the CCI (14) indicator is above the 0.0000 level, it denotes a bullish trend.

Stop Loss for Buy Entry: Place stop loss ~ 7 – 15 pips below entry price.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit from position(s) if the following chart or indicator patterns are in display:

  1. If an inside bar forms in the course of following the trend, then it is a sign that price is experiencing some reduced volatility, and considerations for an exit or take profit should be made.
  2. If price closes below the lower black line of the Envelopes indicator, it is a signal to exit or take profit accordingly.
  3. As shown on Fig. 1.0, if the green line of the CCI (14) MT4 indicator breaks below the 0.0000 level, it is a trigger to exit or take profit.

Sell Entry Rules

The following rules will define the sell entry for this strategy:

  1. If an inside bar price action pattern forms on the activity chart, it denotes congestion in the market and further suggests of a possible breakout.
  2. If “rule 1” holds true on the chart, watch out for a bearish candle to open and close below the black lower line of the Envelopes indicator, this is a sell signal.
  3. If the green line of the CCI (14) MT4 indicator breaks below the 0.0000 level, it is a sell trigger.

Stop Loss for Sell Entry: Place stop loss ~ 7 – 15 pips above entry price.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit on position(s) if the following chart/indicator patterns are in display:

  1. If an Inside Bar forms, be prepared to exit or take profit as it denotes a possible reversal in trend.
  2. If a bullish candle closes above the upper green line of the Envelopes indicator, it is a signal that price is pushing higher, as such an exit or take profit would be a wise decision to make.
  3. If the green line of the CCI (14) MT4 indicator pushes above the 0.0000 level, it is a trigger to exit or take profit.

inside-bar-cci-forex-trading-system

Fig. 1.1

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About The Trading Indicators

An Inside Bar is also referred to as a reversal pattern which develops when the second bar or candlestick is engulfed within the previous candlestick’s low and high.

The Envelopes MT4 indicator is a trend indicator that is built after the moving averages and is also tagged a Moving Average Envelopes.

The CCI or Commodity Channel Index is an oscillator with values placed between 100 and -100. The market is said to be overbought (bearish alert) if the CCI value is above 100 and oversold (bullish alert) when the value is below -100.

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