This may help you to get started. Spend sometime with it and see when and where it breaks down and why.
CCI(13) system consist of five componets.
[A]First CCI(13) must go below -100 for a buy signal and above +100 for a sell signal and subsequently reverse by one period.
Once the reversal occurs the buy/sell alert is sounded; begin looking to MACD (5,35,4) for confirmation.
The most conservative confirmation would occur when the signal line crosses the difference line. However, system also allows confirmation if a reversal in direction is apparent or there is a "convergence" of these two lines.
Confirmation by MACD generally lags the buy/sell alert by several days.
[C]Once MACD (5,35,4) has confirmed the CCI(13) by/sell alert, it is important to check three additional indicators for further confirmation.
First, DMI- (selling pressure) must be declining by at least one period for buy signals and DMI+ (buying pressure) must declining by at least one period for sell signals. Does NOT require a rising ADX line. Simply requires +/-DMI to be moving in direction of trade by at least one period when MACD confirms.
[ii] Secondly RSI (9) must be moving in direction of the trade by at least one period.
[iii]Relative Strength vs A major index must be moving in direction of the trade by at least one period(so that you do not fight the overall market).
[D]Can also use a 5/13 period moving average x-over if desired but this indicator is not a required part of the system.
System should work across all time periods.
Also read this:
http://stockcharts.com/education/TradingStrategies/Multicollinearity.html
CCI(13) system consist of five componets.
[A]First CCI(13) must go below -100 for a buy signal and above +100 for a sell signal and subsequently reverse by one period.
Once the reversal occurs the buy/sell alert is sounded; begin looking to MACD (5,35,4) for confirmation.
The most conservative confirmation would occur when the signal line crosses the difference line. However, system also allows confirmation if a reversal in direction is apparent or there is a "convergence" of these two lines.
Confirmation by MACD generally lags the buy/sell alert by several days.
[C]Once MACD (5,35,4) has confirmed the CCI(13) by/sell alert, it is important to check three additional indicators for further confirmation.
First, DMI- (selling pressure) must be declining by at least one period for buy signals and DMI+ (buying pressure) must declining by at least one period for sell signals. Does NOT require a rising ADX line. Simply requires +/-DMI to be moving in direction of trade by at least one period when MACD confirms.
[ii] Secondly RSI (9) must be moving in direction of the trade by at least one period.
[iii]Relative Strength vs A major index must be moving in direction of the trade by at least one period(so that you do not fight the overall market).
[D]Can also use a 5/13 period moving average x-over if desired but this indicator is not a required part of the system.
System should work across all time periods.
Also read this:
http://stockcharts.com/education/TradingStrategies/Multicollinearity.html
