Monday, May 8, 2017

The Ultimate Guide To The CCI Slingshot Trading Strategy

My Introduction to the CCI Slingshot Trading Strategy

Many years ago when new to trading, I participated in a forum and got to meet Olm who introduced me to this strategy. Of course, he posted trades almost every day and was present to reply to questions. For a newbie to trading, the CCI Slingshot seemed to be simple and it proved to be a way to make some profitable trades.
I have written a couple articles about the Slingshot in the past, today I will try to document it much more thoroughly.

The Setup 

The indicators required are
CCI 14
EMA 34
These are included with almost all charting packages and it is a simple layout on a chart…. quite sereviceable.

The pattern appears on all time frames, people can use daily or a fast tick chart or anything in between.

Here is an example:


As you can see, the setup is simple and the chart is relatively clean.
In this example, price has retraced and the CCI 6 climbed up to the 100 line while the CCI 14 climbed up to the 0 line……. As price resumed the trend, we have the entry. Simple Stuff!
Of course, this entry is on a one minute chart, price will not move that far. but on the longer time frames there will be a good move, most of the time.

I want to include all of the material I can locate on this trade, provide a complete background as there is more than my interpretation to be studied. The first article is one published by OLM many years ago.

CCI Slingshot Theory – olm

3 Jun 2003
Let's define what a slingshot is:
A slingshot is a pullback against an existing trend. For example, let's say that you have a strongly upwardly trending market. It would be only natural to see a little either profit-taking, or just reversal off of that upwardly trending market, because markets don't move, either straight up or straight down.
The purpose of the slingshot is to be able to identify those pullbacks against the trend, and then re-enter in the direction of the trend.
There are many different ways of defining trend: some people use the 20 EMA, some the 34 EMA, some 89 EMA - just a wide variety of different methods. What I have found that works for me is to define the trend as the direction of the 34 EMA. I am not saying that the others won't work, or don't work; just that I and others have found the 34 EMA to be the best measure of trend.
Now, the CCI (commodity channel index) is used to see the slingshot. We use two different CCIs, overlaid onto each other. The CCIs are identical, except for the length. One CCI has a length of 14, the other (commonly called the turbo), has a length of 6.
So basically, the three indicators used are: the 34 EMA, and 1 CCI with a length of 6, and 1 CCI with a length of 14.
Now, let's assume, for the sake of argument, that we have an upwardly trending market, and then we get a correction within the 34 EMA uptrend. Typically, to get a slingshot, the turbo CCI goes down to the minus 100 level, and the 14 CCI goes to the 0 line. This is a slingshot set up for a long trade.
Now, I have been asked many times if the numbers have to be exact. what we are looking for here is the basic pattern, not exactitude. In other words, the CCI 14 can turn around in what is called the zero line zone. Now that is where the CCI 14 has a value between plus 33 and minus 33. Correspondingly, the turbo CCI doesn't have to go to exactly minus 100; it can go minus 110, minus 120 - you get the idea. What I have found essential is to have about 100 points between the turbo and the CCI 14.
Now typically, I use a 3 minute chart to identify slingshots. This is because I use IB as a data vendor. Now, if I were using a data vendor that sent out all the ticks, which IB does not, then I would be looking at a 233 tick and a 3 minute chart.
I used the 175 tick on Sierra, due to the fact that the Sierra tick chart is really a combination of a tick and a one minute chart. But for Ensign users, I would just look at a plain old 233 tick chart and, of course, the
3 minute.

This is just my way of doing it. Slingshots work on all time frames. I have seen them on 5 minute charts, 10 minute charts, 13 minute charts, 30 minute charts, daily charts, etc.
Ok, how to enter on the slingshot. Typically, on a normal slingshot, you will see a very distinct V on the turbo, at around the minus 100 area, for an uptrending market. On the other side of the V is the re-entry long. Generally, I would use a 2 point stop. Others would use different, but I certainly wouldn't use less than like 1.25-1.5. It is just what I've seen that works.
Slingshots don't go on forever, just as trends don't. Generally, from what I've seen, you can get either 3 or 4 good slingshots in a trend, using a 3 minute chart. This corresponds with the well-known market adage of 3 rallies to a top and 3 drives to a bottom. After these 3 or 4 moves, I begin to get very leery of taking another slingshot, because generally the move has petered out.
One other thing, before I leave this first preliminary session about slingshots and their theory: if you compare a 233 tick chart with a 3 minute chart, you will generally see slingshots on the 233 tick chart that
you won't see on the 3 minute. This is because the slingshot that you can see on the 233 tick chart will, on the 3 minute chart, look more like a bull or bear flag. but, either way, whether you use a 3 minute chart, or a tick chart, the slings are there.

Hopefully, this has not been as clear as mud, and I am sure that there will be questions. Please feel free to email me at ****************** with any you may have. Unlike others, I want to focus on things that CAN be traded. Others look at these weird ESPX weekly charts, or monthly charts, or some goofy thing that you can't trade. This is not my style. I want this to help others generate real dollar profits.

and the charts he posted with the article are here

Trading the CCI with examples by  FITZY......

Here is a simple and concise interpretation of how to trade with CCI. It comes from Fitzy, across the pond in Australia. These charts come by courtesy of Steve Fitzsimmons, Fitzy40.
If you have comments or questions for Fitzy and how he trades CCI you can go there. You can also find Fitzy trading at night on Paltalk.
Fitzy gives great advise when he says "It does not work for everyone. Trades are taken at your own risk. The examples included have been chosen to show the set-ups. Set-ups don’t always work. They are a guide only."
This is always the case with valid trading methods.
I personally do use CCI on one of my screens that I trade from. The most important factor is screen time. Learning the nuances of a setup/indicator will allow you to become a consistent profitable trader. Six variations of using CCI are presented here by Fitzy. If you master just one you can be consistently profitable. My advise is to do exactly that. Master one setup, then add another setup or another indicator to tweak the setup.

Trading the CCI with examples by FITZY
The following is a list of set-ups  and my interpretation of them. It is up to individual traders to make a workable trading plan from them.

Example 1.
The CCI that is used is a standard 14 period (black). There is also the turbo CCI that is a 6 period CCI (red) overlaid on top of the 14 period CCI. 

This list is not the holy grail but it is somewhere for new traders to the CCI to begin. The set-ups can be used with either 14CCI or turbo CCI or a combination of both. The CCI can be traded a number of different ways such as:1) Regular Divergence (against the trend)
2) Reverse or Hidden Divergence ( with the trend)
3) Trendline breaks
on the CCI indicator
4) Zero line rejections or crosses
5) The slingshot pattern (via Buffy and Jimmer)
6) Extreme trades

These set-ups can be used on any time frames. Others can be used depending on your trading style.

Example 2  back to index
The trend on the CCI is determined by the zero line. If you have more than 5-6 bars above zero the trend is up and vice versa for down.

I will now explain the set-ups and my interpretation of them:-
Example 3  
1) Regular divergence set-ups use 3 – 10 bars. The trigger is when the 14 CCI crosses the 100 line. The divergence must occur above or below the 100 lines on the indicator and the best ones occur at an extreme reading of 200 or more. Remember these set-ups are against the trend.

Example 4  
2) Reverse divergence set-ups use 3 – 12 bars. They can occur anywhere and they are the stronger divergence set-ups as they are with the trend. Use a trendline break or a zero cross as the trigger.

Example 5 
3) Trendline breaks occur on the CCI indicator not on the price. The best ones have well defined peaks and valleys and the more touches of a trendline the stronger they are. They should always start from outside the 100 lines. My favorite ones are with the trend. Others with high win % are when they occur at the zero line.

Example 6 
4) Zero line rejections occur when the CCI comes up to or goes down to the zero line then hooks and goes back in its original direction. These are best with the trend.

Example 7 
5) The slingshot pattern is when the 14 period CCI rejects the zero line and the turbo CCI hooks at around the 100 line. Trigger is the hook of the CCI.

More of that article here

Here is a page on this site that you may have a look at

That concludes this description of the CCI Slingshot, I hope you will find it to be an excellent addition to your trading tool box.

Good trading!!


I have added a short movie which includes some Renko charts.

Saturday, May 6, 2017

The Ultimate Guide to Bullish Divergence Trading Strategy

Bullish Divergence is being observed by many traders daily as they are seeking market reversals.
It is usually located by noticing the movement of an oscillator such as Macd or CCI or Stochastic.
In this guide you will find many sources of information abouit Bullish Divergence and those ideas will assist your trading.
Studying a Bullish Divergence Trading Strategy will enhance your trading, particularly if you like to see what the end of a downtrend looks like.

Divergences, Momentum And Rate Of Change

Oscillators tend to be somewhat misunderstood in the trading industry, despite their close association with the all-important concept of momentum. At its most fundamental level, momentum is actually a means of assessing the relative levels of greed or fear in the market at a given point in time. Markets ebb and flow, surge and retreat - the speed of such movement is measured by oscillators.
Oscillators are most useful and issue their most valid trading signals when their readings diverge from prices. A bullish divergence occurs when prices fall to a new low while an oscillator fails to reach a new low. This situation demonstrates that bears are losing power, and that bulls are ready to control the market again - often a bullish divergence marks the end of a downtrend. Bearish divergences signify potential downtrends, when prices rally to a new high while the oscillator refuses to reach a new peak. In this situation, bulls are losing their grip on the market, prices are rising only as a result of inertia, and the bears are ready to take control again.
Types of DivergencesDivergences, whether bullish or bearish in nature, have been classified according to their levels of strength. The strongest divergences are Class A divergences; exhibiting less strength are Class B divergences; and the weakest divergences are Class C. The best trading opportunities are indicated by Class A divergences, while Class B and C divergences represent choppy market action and should generally be ignored.
Class A bearish divergences occur when prices rise to a new high but the oscillator can only muster a high that is lower than exhibited on a previous rally. Class A bearish divergences often signal a sharp and significant reversal toward a downtrend. Class A bullish divergences occur when prices reach a new low but an oscillator reaches a higher bottom than it reached during its previous decline. Class A bullish divergences are often the best signals of an impending sharp rally.
Class B bearish divergences are illustrated by prices making a double top, with an oscillator tracing a lower second top. Class B bullish divergences occur when prices trace a double bottom, with an oscillator tracing a higher second bottom.
Read more:

How to Trade Bullish and Bearish Technical Divergences

When an indicator “fights” with the actual price action traders can profit.
Sometimes a technical indicator will disagree or “fight” with the actual price action of the stock or index you are analyzing. These “disagreements” are actually very useful for technical traders. In this three part series we will discuss and learn how to apply these powerful technical signals called divergences
Trading divergences – Part One

Friday, May 5, 2017

Why Do You Have Such A Bad Trading Attitude?

 The most important aspect of trading is the attitude of the trader. Should the trader be negative, there will be problems, trades will not go well.
We must observe and manage our attitude continually.
These authors share some excellent ideas for using attitude to succeed.

When Trading, Attitude is King

Shutterstock photo
Attitude is everything. Ask any motivational speaker or “life coach” and I am sure they will confirm that. I would say to ask a paid trader, but in my experience, many of them don’t understand the significance of attitude. I spent nearly twenty years getting to know and understand traders, and most of them genuinely believe that they get the majority of calls right and that this is due to some ill-defined innate ability to make great decisions. In reality, however, a large part of their success is due to an ability to shrug off and forget losing trades and approach each opportunity with fresh enthusiasm. I doubt that many of them get a greater percentage of calls right over their career than do most day traders who pay, rather than get paid, to trade. What separates them is their approach to each trade.
Read More:


Gold Analysis Articles As At May 5, 2017

Here is a collection of the best Gold Analysis articles posted today. They describe the current market and give a look at what may be coming in future for the metal.

End of day analysis for Gold 05-05-2017

End of day analysis for Gold 05-05-2017

Gold price resumed its negative trading after the slight rise that it witnessed in the past sessions, to remain stable below the bullish channel that appears on the above chart, which makes us continue to suggest the bearish trend in the coming period, which its next target located at 1211.31, while achieving it conditions holding below 1250.00.

Read More

Gold Price Cycle Update

Seems everyone (me included) is trying to spot when the next Intermediate Low in gold and PMs will be. Again, one of the things I am looking for is a failed short-term Trading Cycle to confirm the move into the next Intermediate Low.
Well, we now have Failed Trading Cycles in silver and two Failed Cycles in GDX and GDXJ. Silver and the GDXJ are very oversold here so could we be nearing an Intermediate Bottom (RSI, MACD and Slow Sto are all at or approaching ICL levels)?  But gold is the Cycle driver and the gold chart is giving me some issues (see my next section).

Read More

Gold Prices Unmoved by NFP Data Release

Talking Points:
  • Gold Prices Unmoved by NFP Data Release
  • Markets Next Look to Janet Yellen for Direction
  • Looking for additional trade ideas for gold and commodities markets? Read our 2017 Market Forecast
Gold Prices remain flat this Friday, despite US NFP (Non-farm Payrolls) figures beating expectations this morning. Expectations for this morning’s NFP (APR) event were set at 190k and were beat with an actual figure of 211k. Going into this weeks close, gold and commodity traders will next be looking to Janet Yellen speaking at Brown University at 17:30 GMT to provide further market direction.

Read More

Gold Price Prediction for May 8, 2017 

Gold Price Prediction for May 8, 2017

Gold prices attempted to move higher but hit resistance and were unable to gain further traction, easing lower into the close, following the stronger than expected U.S. Non-farm payroll report.  Prices broke through and upward sloping trend line that was robust support generated from connecting the lows in December of 2016, to the lows in March and comes in near 1,240.  Additional resistance on the yellow metal is seen near the 10-day moving average at 1,254.  Target support for gold prices is seen near the March lows at 1,194.

Read More

Last chance for Gold and Oil 

Last chance for Gold and OilLast chance for Gold and Oil

Last chance for Gold and Oil 

  • Last three weeks for the commodities are terrible. Most of them were loosing ground and it looks like the situation in the long-term is set – we should see a further decline.
  • WTI made new yearly lows and attacked the minimums from the November 2016. That is where we finally found a demand and currently the price is creating a nice hammer. In the theory, it is a good chance for a reversal or at least for a small bullish correction. The chances for a correction will rise if buyers will manage to close the day above the 45.5 USD/bbl support.
  • DAX is showing a huge strength. They managed to break the upper line of the channel up formation, which happens only during strong trends. No bearish signals whatsoever and the bullish party goes on. 

Read More

Thursday, May 4, 2017

The Tower Scalping Trading Strategy as At May 4, 2017

I have another post on this system from a couple days ago, you can see it here, There is a description of the components.

Here are some looks at entries from today on a 15-minute chart. You can see that there were several entries as the pairs were trending nicely.

I like the idea of the 15-minute chart although I can understand that people would like to use the 5-minute chart for a little more activity...

The simplicity of this system allows a trader to watch several charts at a time so there is a good opportunity for daily profits.

As long as people are using a sensible stop loss there should be no worries about serious risk to the account.

Here are the charts.

Good Trading..!

Great Book For Long Term Stock Investors

William O’Neil started to work as a stock broker in 1958 and began to make early use of computers and data for his analysis. Within a few years, he  purchased a seat on the New York Stock Exchange at age 30. It was at this time that he developed the famous CAN SLIM investing strategy.

While with his first firm, Hayden, Stone, and Company he was the top performing broker.

In 1963 He founded William O’Neill and Co. Inc, one of its features was that he developed the first computerized securities database.

Over the years, the CAN SLIM method has influenced multitudes in the trading business. Today it is described by many as a razor sharp method for picking long term investments.

The book ‘How To Make Money In Stocks’ embodies the CAN SLIM approach.

The CAN SLIM approach likes to use the 'Cup and Handle' pattern.

Here are some charts showing that pattern.

As you can see, this pattern is subjective to some extent and only experience is going to teach the investor accuracy in recognizing the pattern.

There are many other factors to be considered in this analysis, and those are fully discussed within the book.

You can inspect the book and readers reviews at this link - How To Make Money In Stocks.

Monday, May 1, 2017

Fear And Greed Index As At May 1, 2017

The Index  has stayed in the neutral position for a few days now as you can see in the picture.

And here is the longer term view showing the fluctuations from year to year.

Certainly the markets will not be staying in the neutral position for long, however, at this time there is not really anything that will show direction for the Index.

The Index has several components. You can inspect those  components on the CNNMoney site here.
CNNMoney developed the Fear and Greed Index from several means of calculation and combined the results to reflect in the meter diagram.

The Tower Scalping Trading Strategy

This may be the simplest of all scalping strategies available for a five-minute chart.
A visual strategy that requires only one indicator, a rainbow of moving averages.



The entries are relatively simple with this trading strategy.
Usually one would enter on a retrace, price entering the moving average rainbow and then bouncing back, the entries to be ‘with trend’.


As an alternative setup to using the moving averages only is to add a stochastic oscillator, however, as you can see in this chart, using a stochastic to confirm signals is a waste of time.


While a trader may start off with only one chart to learn how to trade this strategy, they may well want additional charts because of the delays in entries. The system moves slowly enough that someone could probably monitor 10 charts or even more.


A bit of experience and a few hours of screen time will allow the trader to add charts to his screen and have a more profitable day.

Stop Loss and Take Profit

It is most essential that a trader uses a Stop Loss with this technique, especially because the markets have been known to reverse quickly. I would suggest a Stop Loss of no more than 10 pips, especially for someone new to trading.
The take profit should be set at approximately ten or fifteen pips, except on GBP pairs which sometimes have excellent volatility.
The trader is going to have to determine what risk he is prepared to take for entries with this system.
A good exercise is to ‘paper trade’ perhaps 50 or more entries, recording details as Stop Loss used, Take Profit used – these being on each currency pair as they all have their own patterns.
After such a test, then the trader can adjust stop loss and take profit according to experience.

Good Trading...!


More charts showing entries on this page

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