Choppiness Index Indicator is a Forex Technical tool which helps you understand the trend and momentum of the market. This is a two in one indicator and you could make valid trading decisions based on the indicator you see in the indicator window. Choppiness Index Indicator works best when combined with moving averages because when used alone it doesn’t give clear buying and selling signals. Good results can be archived in trending markets.
After installing Choppiness Index Indicator in your trading platform, your chart should look like this image below;
Choppiness Index Indicator consists of a channel and an oscillator which moves like Moving Average Convergence & Divergence (MACD) signal line. The upper band of this indicator works as an overbought and the lower band works as the support zone. Therefore, when the yellow oscillator is around the lower band you should look for buy signals and when the yellow oscillator is around the upper band, you should look for selling opportunities.
Conditions For Buying Using Choppiness Index.
- The market should be up trending.
- Markets should be bouncing from the latest support.
- The yellow oscillator of Choppiness index indicator should be rising from the lower band.
- Place your long position when above conditions are met.
- Place your stop loss below the recent support.
- Take your profit when yellow oscillator breaches below the lower band.
Conditions For Selling Using Choppiness Index.
- The market should be down trending.
- Markets should be falling from the latest resistance.
- The yellow oscillator of Choppiness index indicator should be falling from the upper band.
- Place your short position when above conditions are met.
- Place your stop loss above the recent swing high.
- Take your profit when yellow oscillator breaches below the lower band.
Download Free Forex Choppiness Index Indicator
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