Currently Divergence is the most profitable system for me. CCI is the only oscillator indicator I have been using for last few years. Previously I use stochastic and oSMA and other oscillator but to me CCI is better than those two indicators to spot divergence. On this post I want to show you a profitable divergence that can give you a good profit for day trader or scalping. No more words, see this picture below.
Trading rule (Long/Buy)
- Price has made 2 significant lows and break lower Bollinger Bands (or in BB oversold area).
- CCI shows divergence
I will not enter the trade if both conditions are not satisfied. For example price has made 2 lows but CCI does not show divergence. Buy position can be placed on the next candle after divergence and stop loss MUST be placed 5 pips or more below previous low. But I recommend you not to put your SL on your trade. Simply keep in mind if the price still goes down further and break the low, you should close your position. And stay away from the news. Do not enter the trade immediately after the news. Wait for few minutes and see if the news has made a clear direction to the market.
Thank you
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