A useful tool
Having entered a volatile sideways zone in the BTC market and most likely soon to be followed various other markets as well, and overall a volatile year to be expected to continue i wanted to introduce a tool that specifically has good utility, risk reduction and easy to read entry functionality.
What is vastly underestimated or simply wrongfully applied is what edges to use in what trading environments.
Typically traders differentiate between trending and non trending environments, have no tolls to see rotation from one to the other-ignore sideways markets as a condition and do not even make a differentiation on when to apply oscillators over indicators and vise versa.
Todays focus is on the CCI trendline break pattern
It isn't as leading as the Vegas or the zero line reject but it has one valuable edge beside its in crease of validity and probability in volatile sideways markets , which is it works in both directions.
the following picture shows how other CCI classifications are only applicable to either fade or reload a market
not so the variants of the trend line break:
As you can see in the right column both the TLB and the HTLB are applicable for either trend change entry use or for continuation plays.
You will find this versatility useful
a in a reduction of indicator/oscillator plotting and as a result screen space saving and
b a reduction in the red car syndrome for the mind since you are not looking onesided
this makes its application especially useful for beginning trades since it is intuitive and easy to read
Due to the multipoint actual trendline within the indicator needing to be plotted it also supports ample prep time and it leads one towards the entry point
almost with a gentle push timing entries for you
(very different from a ZLR or vegas CCI formation)
So without further ado:
Much of the mentioned above might seem confusing but will get more clear if you start forward and backward test this oscillator pattern in real time and get a feel for its application.
There is many detail intricacies that can be talked about but at this stage I would just like you all to get a feel for the basics and you will find I am not wasting your time should we stay on volatile grounds which seems evident for the next six months to come.
One reason why this tool can be very useful is for example the hard to measure reversal turning point within range.
Typically in sideways zones one can easier pick zone and price clues from horizontal supply and demand zones.
yet in a wider range volatile sideways zone traders find themselves with anticipatory trading often in many loosing positions since turning points can take longer and trade dirtier (dirty=spikes and lots of wide wick ranges).
measuring a confirmed entry on an aggressive momentum tool like the CCI oscillator allows for a stop risk reduction and it is still early enough to not kill risk reward ratios.
I do not want to bore you with my statistical back tested numbers over large sample sizes but rather encourage for you to have your own findings to gain the necessary confidence in having seen enough signals and paper traded this additional edge plenty enough yourself to be able to possibly hip pocket this tool to your arsenal should it resonate to your liking.