2. STRATEGY OVERVIEW
Name : CCI Divergence Breakout Strategy
Ti m e f r a m e : 1 5 m i n s a n d a b o v e
Indicators : CCI (Commodity Channel Index)
Strategy By : Analyst Navin Prithyani
(urbanforex.com)
3. UNDERSTANDING DIVERGENCE
Understanding Divergence
T hi s s t r ateg y u s e s hi d d e n d i v er g e n c e a nd p r i c e a c t i o n to t a ke a b r e a ko ut t r ad e . D i v er g e nc e
i s t h e o n e key i n d i c at i o n i n t h e m a r ket t h at c an b e u s ef ul a nd i s not l ag g i ng . I t i s a s i g n o f
a m a r ket r ev er s al c o m i ng u p i n t h e n e ar f ut ur e . U nd er s t an d i ng a n d m a ki ng u s e o f
d i v e r g e n c e w i l l h e l p a te c h n i c al t r a d e r g r e a t l y w h e n a n a l y z i n g t h e m a r ket .
N ote : O n my C C I , I al way s c o nn e c t my p e a k s (to p s ) nev er t h e b ot to m s (d i p s ) . I t i s c r i t ic al
t h a t yo u w a t c h t h e v i d e o t u to r i al b e l o w w i t h t h i s s t r a te g y to u n d e r s t a n d i t f u l l y.
L o n g B r e a ko ut
- P r i c e m u s t b e t r e n d i n g d o w nw a r d s
- C C I m u s t g o to w a r d s t h e u p w a r d d i r e c t io n a n d b o u n c e
- A f te r a b o u n c e o n t h e C C I , c o n n e c t yo u r h i g h p e a k s o n yo u r p r i c e
- A g g r e s s i ve : A t a c l e a r c l o s e a b o v e t h e t r e n d l i n e e n te r l o n g
-C o n s e r va t iv e : A f te r t h e t r e n d l i n e i s b r o ke n , w a i t f o r a p u l l b ac k to t h e t r e n d l i n e to e n te r
S h o r t B r e a ko ut
- Price must be trending upwards
- C C I m u s t g o to w a r d s t h e d o w nwa r d d i r e c t i o n a n d b o u n c e
- A f te r a b o u n c e o n t h e C C I , c o n n e c t yo u r d i p s o n yo u r p r i c e
- A g g r e s s i ve : A t a c l e a r c l o s e b e l o w t h e t r e n d l i n e e n te r s h o r t
- C o n s e r v a t i ve : A f te r t h e t r e n d l i n e i s b r o ke n , w a i t f o r a p u l l b a c k to t h e t r e n d l i n e to
e n te r
4. S to p s
- I f yo u r t r e n d l i n e i s n o t t h a t s te e p , yo u c a n ke e p yo u r s to p s a t t h e h i g h / l ow o f t h e
b r e a ko ut c a n d l e .
- I f yo u r t r e n d l i n e i s s te e p , ke e p yo u r s to p a t t h e s w i n g h i g h / l ow
- I f yo u r t r e n d l i n e i s m e d i um s te e p , ke e p yo u r s to p a t t h e l o w o f c o u p l e c a n d l e s aw ay
Exits
- 1 : 1 R i s k to r ew a r d . I f yo u r s to p i s - 1 2 p i p s yo u r l i m i t s h o u l d b e + 1 2 p i p s .
- O p e n 2 l o t s . I f yo u r s to p i s a t - 1 0 p i p s , o n c e yo u r t r a d e s g o e s i n yo u r f av o u r a n d yo u ' r e
a t + 1 0 p i p s , c l o s e 1 l o t a n d l et t h e o t h e r o n e r u n .
E x it a t S u p po r t a n d R e s i st a n c e l e v e l s
- E x i t a t t h e n e a r e s t 5 0 o r 0 0 l ev e l . T h e s e a r e p s yc h o l og i c al l ev e l s . ( m a ke s u r e yo u r ex i t
i s a t l e a s t t h e s a m e n u m b e r o f p i p s a s yo u r s to p , o t h e r w i s e d o n t e n te r t h e t r a d e )
- Tr a i l i n g S to p . O n c e i n a t r a d e , a t t h e c l o s e o f e a c h c a n d l e , p l a c e yo u r s to p 1 p i p b e l o w
the low (if in a buy trade). Vise versa for sell trade.