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Use Momentum and CCI for strong entry after a Retracement

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Use Momentum and CCI for strong entry after a Retracement


Since Momentum is the measurement of the velocity of price changes, it is an indicator best used for determining the strength or weakness of the price action.
Market momentum is measured by taking price difference between closing price, say, 10 days ago and the last closing price for 10-day momentum line indicator. The difference either will be negative or positive and plotted around a zero line.

The formula for Momentum M = V- VX

V is the latest price and VX is the closing price X number of days ago.

CCI is a stochastic oscillator. It measures the change in price relative to moving average(MA) of the price divided by 1.5% of normal deviation (D) from the average.

CCI = Price –MA/(0.015 x D)

In order to place a trade after a retracement (as can be displayed on FIB line) during uptrend, draw a vertical line between the last pivot low on the price line (use apiary pivots) Momentum and CCI indicators. Now measure Momentum which should be 100% and CCI should read above 0. This will ensure a strong entry after a price retracement. Do the opposite, i.e. draw a vertical line at the Pivot HI to measure Momentum and CCI reading for placing short during downtrend.

Fri, 10/05/2018 - 1:12am