Technical Analysis: Modified RSI and CCI Gold Trading Strategy
Modified RSI and CCI indicator strategy work in excellent in the 1-hour time frame .Since the RSI and CCI is a leading indicator it tends to generate the much more false signal in the chart while trading gold.
Professional Gold traders have eradicated the leading oscillator problem by tweaking its value and adjusting it to a specific time frame. After extreme back testing and real life implementation, the adjust period of RSI set to 4 and that of CCI is changed to 9.
Let’s see an example modified RSI and CCI trading strategy:
Figure: Trading the 1-hour time frame in gold using modified RSI and CCI
In the above figure, the trader uses the new value of the RSI and CCI indicator. Professional traders price action confirmation signal along with the modified RSI and CCI to trade the gold. In the 1 hour, time frame a bearish pin bar is formed right at the resistance level of the gold which indicated a good sell entry signal.
After that, Professional gold dealer looks for confirmation and validity of the signal by looking at the value of the indicators. When the value of modified Rsi is above the 70 line and the value of CCI is above the positive 100 line traders took their short entry with the price action confirmation signal.
On the contrary, a bullish price action confirmation signal in the key support level associated with the RSI reading below the 30 lines and CCI reading below the 100 line triggers the long trade for professional trades. Professional traders use tight stop loss which set by using the confirmation candlestick signal and key support and resistance level. Though the success rate of modified RSI and CCI trading strategy is very high yet traders should not risk more than 2% of their account equity while trading the 1-hour time frame in gold trading.