18th Revision of CCI tips and Nuances.

CCI Tips and Nuances

I. The Main Stuff.

1. Woodie's Setup.

a. Very simple 3min and 5min Charts with just the CCI and No Premarket Data ( No
"All Sessions").
a1. Note: "All Sessions" charts also work well.
b. The CCI's Setting is: 14 period, HLC/3.
c. The 3 Min Chart Should only show 25 to 30 Price Bars.
d. The 5 Min Chart Should only show 25 to 30 Price Bars.

2. The CCI in General.

a. The CCI can be used as a trading system in and of itself.

b. The CCI works well with Other Indicators.
c. The CCI works well with Other Systems of Trading.
d. The CCI works well with Futures and Stocks.

3. The Main Charts.

a. 3 Min Chart used for Setups.

b. 5 Min Chart used for the "Bigger Picture".
b1. Sometimes the 5 Min Chart can provide confirmation for the setups on the 3 Min
Chart.
b2. Also, the 5 Min Chart can be used for Setups.

4. To Determine the Trend on The CCI.

a. On The CCI, The Zero Line is the Dividing Point between the Uptrend and the
Downtrend.
b. When The CCI is Below The Zero Line for at least 5 or More price bars, look to go
Short. Exception would be Divergences.
c. When The CCI is Above The Zero Line for at least 5 or More price bars, look to go
Long. Exception would be Divergences.

5. A CCI Warning.

a. The CCI Indicator measures Momentum.

a1. The Greater the angle of the CCI line, the greater the momentum.
b. Be careful if the CCI line is "Flat". A Flatten CCI line means NO Momentum.
b1. Trying to enter a setup with a "flat" CCI Line will increase your chances of getting
stopped out.

6. The 5 Strongest CCI Setups.

a. Hidden and Regular Divergences. (The Most Powerful Setups.)

b. Trendline Breaks With The Trend. (Very Powerful if close to The Zero Line.)
c. A Zero Line Cross & Trendline Break Combo. (Trend and/or Divergence Helps, but
not a factor)
d. Zero Line Bounce/Re-Cross & Trendline Break Combo With The Trend. (Very
Powerful)
e. Horizonal Trendline Breaks. (High Percentage Plays.)

7. Definitions of Divergences.

a. Regular Divergence is basically for Counter Trend Trades.

b. The basic rules for Regular Divergence are as follows:
b1. To go Long, The Price makes a Lower Low, The CCI makes a Higher Low.
b2. To go Short, The Price makes a Higher High, The CCI makes a Lower High.

c. Hidden Divergence is the opposite of Regular Divergence. Hidden Divergence is

often referred to as "Reverse Divergence".
c1. Regular Divergence is usually for conter-trend Plays. Hidden Divergence is usually
for Trend Continuation.
d. The basic rules for Hidden Divergence are as follows:
d1. To go Short, The Price makes a Lower High, but The CCI makes a Higher High.
d2. To go Long, The Price makes a Higher Low, but The CCI makes a Lower Low.

8. Hidden Divergence.

a. Hidden Divergences are for Trend Continuation Setups.

b. Hidden Divergences are more reliable than "Against The Trend" Regular
Divergences.
c. On Hidden Divergences, use Trendline Breaks for Entries.
d. On Hidden Divergences, the Zero Line can be a point of entry.

9. Regular Divergence.

a. Regular Divergences are for "Against The Trend" Setups.

b. Regular Divergences usually have the +/- 100 line cross for entries.
c. On Regular Divergence, you can use Trendline Breaks.
d. On Regular Divergence, you can use the Zero Line as a point of entry.
e. Trading against the Trend can be risky. Lock in Profits. Use good money
management.

10. Divergences.

a. To find reliable Regular Divergences, you should look for 3 to 10 Price Bars.
b. To find reliable Hidden Divergences, you should look for 3 to 12 Price Bars.
c. During The Opening Range ("Day Session Charts"), You can use data from The
Previous day to Spot Hidden and Regular Divergences.

11. The CCI Zero line.

a. The CCI Zero Line is the strongest point of Support/Resistance.

b. Trendline Breaks with The Trend, that are close to The Zero Line, are The Most
Important Trendline Plays.
c. An entry can be made off of a Zero Line bounce, cross or re-cross With The Trend.
d. An entry can be made off of a Zero Line bounce, cross or re-cross with Hidden
Divergence.
e. The Zero Line can sometimes be a point of entry for Regular Divergence.
f. You can also "add" to your position on a Zero Line Cross.
g. In certain situations, you may lighten your position as you approach the Zero Line
and Then re-add to your position as you Cross The Zero Line.

12. The +/- 100 Lines.

a. When The CCI gets Above +100, The Market is becoming Overbought.
b. When The CCI gets Below -100, The Market is becoming Oversold.
c. Trendline Breaks with The Trend that are close to The +/- 100 Lines are riskier than
those which are close to The Zero Line.
d. The +/- 100 Lines are often entry points for Regular Divergence.

13. Trading Trendline Breaks.

a. I look for Trendline Breaks With The Trend.

b. Trendline Breaks with The Trend, that are close to The Zero Line, are The Most
Important Trendline Plays.
c. Trendline Breaks can be done, with The Trend, without Divergence.
d. Trendline Breaks can be done, with the Trend, with Hidden Divergence. (Very
Powerful)
e. Trendline Breaks can be done, against The Trend, with Regular Divergence.
f. Trendline Breaks can be part of a Zero Line Cross, Zero Line Re-Cross, or Zero Line
Bounce Combo.
g. On the CCI, during the opening range ("Day Session" Charts), you can draw
trendlines using the CCI "peaks" or "valleys" from the previous day.

14. More on Trading Trendline Breaks.

a. A lot of times, I may Wait to take the Second Trendline Break off of a New Trend.
a1. It gives me a chance at a Divergence Setup.
a2. It may get me closer to the Zero Line for a better Setup.

15. The CCI Zero Line Cross & Trendline Break Combo.

a. The Setup: The Trendline is Close to or at the Zero Line, and The Zero Line Cross
breaks the Trendline At the same time.
b. The CCI Zero Line Cross & Trendline Break Combo is a very powerful Setup.
b1. Can be done With or Against The Trend.
b2. Can be done With or Without Divergence.
b3. Can be done Against The Trend Without Divergence.

16. Zero Line Bounce/Re-Cross & Trendline Break Combo With The Trend.

a. A Setup done with The Trend.

b. The Setup: When The CCI bounces or Re-Crosses The Zero Line & Breaks a
Trendline at The Same Time.
c. Can be done without Divergence.
d. Can be done with Divergence.
e. A Very Powerful Signal.

17. Horizonal Trendline Breaks.

a. To go Long, you look for Horizonal Peaks to draw your Trendlines.

a1. The Horizonal Peaks should be around the -100 Line.
a2. Can draw a Horizonal Trendline off of 2 Peaks, but 3 peaks are better.
a3. The Horizonal Peaks can be at a slight angle. However, the more Horizonal, the
Better.
a4. Your entry is on The Break of the Horizonal Trendline.
a5. Can be done with or without Divergence.
a6. High percentage play.

b. To go Short, you look for Horizonal Valleys to draw your trendlines.

b1. The Horizonal Valleys should be around the +100 Line.
b2. Can draw a Horizonal Trendline off of 2 Valleys, but 3 Valleys are better.
b3. The Horizonal Valleys can be at a slight angle. However, the more Horizonal, the
Better.
b4. Your entry is on The Break of the Horizonal Trendline.
b5. Can be done with or without Divergence.
b6. High percentage play.

18. The CCI Extreme +/- 200 or higher Hook.

a. On CCI Extreme Hooks, watch out for the Regular Divergence Trap.
a1. On Regular Divergence, an Extreme Hook may only indicate that the market is
slowing down, but has not Reversed yet.
a2. In other words, just because the CCI Hooked, doesn't mean that the Price has to
Hook.
b. Will have to use other indicators to filter Extreme Trades.
c. I also like CCI Extreme Hooks off of Hidden Divergence.
d. An Extreme CCI hook, off of a strong Regular Divergence, doesn't need a Filter.

19. The 5 Minute Chart.

a. On The 5 Minute Chart, look for Regular and Hidden Divergences.

a1. For Divergences, use the same rules as you would on The 3 Min Charts.
a2. The 5 Minute Chart can often show clear and powerful Divergences not seen on a 3
Min Chart.
a3. You can trade Divergences right off of The 5 Min Chart.
a4. You can use the Divergence on The 5 Min Chart to give you insight on an entry off
of The 3 Min Chart.
a5. Divergences on the 5 Min Chart can often result in some nice size moves.

b. On the 5 Minute Chart, Watch for Zero Line Bounces.

b1. Zero Line Bounces can produce some nice setups not seen on a 3 Min Chart.
b2. You can trade Zero Line Bounces right off of the 5 Min Chart.
b3. You can use The Zero Line Bounce on The 5 Min Chart to give you insight on an
entry off of The 3 Min Chart.
b4. Zero Line Bounces on The 5 Min Chart can often result in some nice size moves.

20. Entries.

a. On Entries, the Term "Waiting for the Price Bar to Print" is the same as saying
"Waiting for the Price Bar to Close".
b. On The CCI, the Buy/Sell Setup or Signal is Only Confirmed when The Price Bar
Prints.
c. On a Buy/Sell Setup or Signal, You can enter a trade before the 3 min Price Bar
Prints. But keep in mind that if The Price Bar "pulls back", the CCI Line will "Pull back"
and leave you with "No Entry Signal". Your chances of getting Whipsawed or stopped
out are greater.
d. On a Buy/Sell Setup or Signal, for Conservative Entries, wait for The Price Bar to
Print.
e. On a Buy/Sell Setup or Signal, for Aggressive Entries, you can enter before The
Price Bar Prints.
f. When The 5 Min Chart gives a Buy/Sell Setup or Signal at the same time The 3 Min
Chart gives a Buy/Sell Setup or Signal, this is very powerful.

21. To Print or Not to Print Entry Problem. (VERY IMPORTANT)

A. The 1st part of this Entry Problem comes in 5 steps:

a1. You get an entry signal before the 3 Min Price Bar prints.
a2. You jump in.
a3. The 3 Min Price bar pulls back which causes the CCI Line to pullback.
a4. Now you have no more signal.
a5. Then you get Stopped Out.

B. The 2nd part of this Entry Problem comes in 4 steps:

b1. You get an entry signal.

b2. You wait for the 3 Min Price Bar to Print.
b3. By waiting for the 3 Min Price Bar to Print, you now miss most of the move.
b4. You end up scratching The Trade.

C. A Solution:

Once I get a CCI Setup, I look for a Price Pattern to Time my Entry.

a. My favorite pattern for timing entries is The "3 Bar Reversal Pattern".

b. My Second favorite pattern for timing entries is "Double Tops" and "Double
Bottoms".

22. 3 Bar Reversal Pattern (Note: White Candle is Bullish, and Red Candle is Bearish.)

a. The Basic Setup:

a1. To go Long, Bar #1 should be a Red Candle.

a2. Bar #2 can be Red, White or Neutral.
a3. Bar #2 Should be a Lower High and Lower Low compared to Bar #1.
a4. Bar #3 Should be a Higher Low compared to Bar #2.
a5. The Entry is when Bar #3 takes out The High of Bar #2 by 1/4 Point.
a6. Enter off of Bar #3 Before it "Prints".
a7. The Setup is, most effective, for Trades with The Trend.
a8. The Setup can be used for Trades Against The Trend.

b1. To go Short, Bar #1 should be a White Candle.

b2. Bar #2 can be Red, White or Neutral.
b3. Bar #2 Should be a Higher Low and Higher High compared to Bar #1.
b4. Bar #3 Should be a Lower High compared to Bar #2.
b5. The Entry is when Bar #3 takes out The Low of Bar #2 by 1/4 Point.
b6. Enter off of Bar #3 Before it "Prints".
b7. The Setup is, most effective, for Trades with The Trend.
b8. The Setup can be used for Trades Against The Trend.

c. AFTER I get a Good CCI Setup, I use The 3 Bar Reversal to time The Entry.
d. Can use variations of The 3 Bar Setup on CCI Setups.

23. Double Tops and Double Bottoms (Note: White Candle is Bullish, and Red Candle is
Bearish.)

a. The Basic Setup:

a1. A Double Bottom is a 3 Bar Setup.

a2. Use Double Bottoms to go Long.
a3. A Double Bottom is when 2 Candles, side by side, have The Bottoms of "The
Candle Bodies" matching, or The Bottoms of "The Candle Wicks" Matching.
a3a. If The Bottoms of The Candle's Bodies are matching, The Wicks do not have to
match.
a4. The Candles Can be the same Color, or different Colors.
a5. As Soon as Candle #3 Starts to Turn White, Pull The Trigger to go Long.
a6. The Setup is, most effective, for Trades with The Trend.
a7. The Setup can be used for Trades Against The Trend.

b1. A Double Top is a 3 Bar Setup.

b2 Use Double Tops to go Short.
b3. A Double Top is when 2 Candles, side by side, have The Tops of "The Candle
Bodies" matching, or The Tops of "The Candle Wicks" Matching.
b3a. If The Tops of The Candle's Bodies are matching, The Wicks do not have to
match.
b4. The Candles Can be the same Color, or different Colors.
b5. As Soon as Candle #3 Starts to Turn Red, Pull The Trigger to go Short.
b6. The Setup is, most effective, for Trades with The Trend.
b7. The Setup can be used for Trades Against The Trend.

c. AFTER I get a Good CCI Setup, I use Double Tops and Double Bottoms to time The
Entry.

II. The Other Stuff.

1. The CCI settings of 14 HLC/3 seems to give a faster signal than 14 "Close" on the 3
min charts.
2. Often, if the CCI is "bouncing" between the +100 and -100 lines or around the Zero
line, this could be an indication of a Choppy Market.
3. If you can, trade 2 contracts. When you are up 1.5 to 2 points, drop one and move
your stop to break even. You can now let the other contract run for a "low risk" trade.
4. Hooks, Zero Line bounces, Zero Line re-crosses, and Trendline Breaks can be signals
to lighten up your position or exit the Trade.