CCI Divergence Indicator
The best divergence detector indicator for trading market reversals. Free download. An advanced tool for excellent buy and sell signals in any chart and instrument.
Description
Commodity Channel Index (CCI) divergence indicator is a handy tool for technical analysis. As the name suggests, it identifies hidden divergences between the price and the CCI technical indicator. Divergence shows potential solid reversal points in the market and, in turn, great entry points for traders.
Detecting divergence is an ambiguous task. Luckily, the CCI divergence indicator gets the job done. While any trader can use the indicator, it is the best indicator for divergence and reversal traders.
How to Use the CCI Divergence Indicator
So how does the indicator identify divergence points, you ask? Well, the indicator compares the price chart and the pivot value in the CCI divergence indicator. It also connects the troughs and peaks in the chart. A hidden bullish divergence occurs when the price chart shows higher lows, but the oscillator forms lower lows. Likewise, a hidden bearish divergence occurs when higher highs form on the oscillator, but the price creates lower highs.
CCI divergence is characterized by the bars visible on the chart. Green bars indicate an uptrend, while the red bars indicate a downtrend. If the indicator detects bullish divergence, it returns +1(forms green histogram). On the other hand, the indicator falls below -1 if the divergence is bearish (red histogram).
Divergence the indicator returns a zero value if there is no. In other words, the indicator does not show any bar if there is no divergence. Besides giving you high probability trade entry points, CCI divergence also provides excellent stop loss and exit points.
Buying and Selling Strategies
Long position– Buy when the CCI divergence indicator shows a green arrow on the chart.
Short position– Sell when there is a red arrow from the chart when there is a bearish divergence.
The above D1 (daily) GBP/CAD chart shows the ideal divergence point. The red arrows indicate potential reversal points of the uptrend, while the green arrows show the bear trend could reverse to an uptrend. The green bars indicate bulls are in control of the market, while the red bars indicate the sellers are strong.
Benefits of CCI Divergence Indicator
The ability to detect divergence in all time frames makes CCI divergence an ideal indicator for both seasoned and rookie traders. That said, this indicator works best in higher time frames.
One of the advantages of using the indicator to trade forex is that it is incredibly flexible. It can work on any instrument and time frame. Also, the indicator allows you to change the color of any text, background, candles, volume, and stop levels. You can also set the indicator to strictly identify the highest probability setups. If you are looking for a suitable indicator to boost your trading strategy, consider the CCI divergence indicator for MT4- download for free.
Conclusion
CCI indicator is an excellent indicator for trading reversals. The appearance of divergence is a strong signal for perfect trade entry. This indicator works best in a 15 minute time frame and above. For the M1 and M5 timeframe, the indicator pops up so often, which is confusing. Also, it could be too late to enter the trade by the time the signal appears. It is powerful in H1 and H4 time frames.
Remember, it is prudent to combine the indicator with other tools and thorough analysis. Additionally, you should always use a stop loss to avoid substantial drawdowns in case the strategy fails. The last thing you should do is expect one indicator to give you perfect signals all the time.