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the interpretation and application of price action concepts

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We all share a similar path in Trading. Even though you may not be a consistently profitable trader now, you can chose to enjoy the path. This alone may make the difference in your success.

 

 

Trading Woodies CCI System by Jeff 

jeffandcci@yahoo.com    Copyright © 2004 Jeff Gannon  


Woodies CCI Club      The Mindset      The System      The Charts     The Trend    The Trade Entry And Exit    The Patterns    The Preparation For Your First Trade  


The Trend    


Woodie has defined the trend using the CCI indicator only.

Woodie does not use price bars to define the trend.

Woodie does not use the 34-ema to define the trend.

Woodie does not use a larger time frame to define the trend.

Woodie uses the same chart to define the trend as he does to spot a CCI pattern for that market.

Each market will have its own trend and is not to be considered when taking a trade on another market.

You do not need any other charts, markets or indicators to see and define the trend.

When learning Woodies CCI system you must trade with the trend. You do not trade counter-trend trades.

 

1 Chart Above – Zero-line (ZL).

 

The chart above shows a single yellow long line and is called the zero-line. It never changes and is referenced many times in Woodies CCI. It has a special meaning in the calculation of the CCI and you can think of it as the equilibrium of momentum over a given period. Pulling back, zigzagging around and crossing over this zero-line (ZL) can be significant in terms of movement

Woodies CCI trend definition is as follows:

 

  • If the CCI is above the zero-line (ZL) for 6+ bars then the trend is up. 

 

  • If the CCI is below the zero-line (ZL) for 6+ bars then the trend is down.

If you are new to trading Woodies CCI system then you should only look for trades that are with the trend until you no longer need this document.

The CCI zero-line (ZL) is a very important and integral part of Woodies CCI system. All of Woodies CCI patterns are defined around the zero-line. It represents major support and resistance at this moment in time. I repeat, at this moment in time. This means that it does not represent a forward-looking projection of where the support and resistance will be in moments from now. The CCI patterns will be adjusted accordingly as the market moves and thus create a new current ‘here and now’ zero-line. The zero-line is tested over and over throughout the trading day.

Furthermore, the CCI +/- 100 value line represents minor support and resistance at this moment in time as well. The CCI +/- 200 and greater values represent overbought (+200 and higher) and oversold (-200 and lower) market conditions at this moment in time.

While a trend is taking place as defined by the 6+ bar rule you can have a few bars print on the other side of the zero-line and still maintain the current trend. But as soon as you see 2+ bars in a row on the other side of the zero-line then you should back off from looking for trades and wait to see what will happen with the trend. The trend might be changing. There is no need to be taking trades unless we are sure of what the market is telling us. Just be patient and wait.

Also, when bars are printing on both sides back and fourth every few bars it is telling you that there is no clear trend so you should not be taking any trades at all. Just stand back and wait. There will be plenty of good trades later. We do not take trades when there is no clear trend. Period.

Until you are following these guidelines consistently and making profits you should only be taking trades that are with the trend. Stay away from trades that are counter-trend.

 

We see that in chart 1 the yellow box has 6+ CCI bars below the zero-line so we are looking for shorts. Also notice in chart 1 that after the square yellow box the CCI crosses the zero-line and prints bars above it. For the first couple bars that are printing above the zero-line, maybe 1 to 2 CCI bars or 3 maximum, we would still be looking for shorts. But be warned that the more bars that print above the zero-line the more we would stop looking for short trades and start counting the number of bars above the zero-line. Once we can count 6 or more bars above the zero-line then so we can start looking for long trades.

 

In chart 2 we see a mix of bars above and below the zero-line. It looks like a mess. No real defined direction so no real trend. Just stay away from trading and wait until we get a solid set of 6 or more bars on either side. When no trend is defined then we cannot take any trades. This is one of the ways Woodies CCI System forces you to not over trade. It’s built into the system. You don’t have to think about it. It just happens if you follow the rules.

In chart 3 we see a clear trend of 6+ CCI bars above the zero-line so we are looking for longs.

After there is a clear trend defined you will look for CCI Patterns to take trades in the direction of the trend. Again, if you are new and still need this document then stay away from counter-trend trades. Also remember that many very experienced traders only take trend trades as well. After all the market should be moving in the direction you want to trade it to start with. There is no reason why you can’t take trend trades your whole entire trading life. It’s natural, it’s normal and it’s highly recommended that you do take trades with the trend.  

Woodies CCI Patterns that are trend trades:

 

  1. Zero-line Reject (ZLR)  
  2. Reverse Divergence (rev diver)
  3. Trend Line Break (TLB)
  4. Horizontal Trend Line Break (HTLB)

 

Woodies CCI Patterns that are counter-trend:

 

  1. Shamu Trade 
  2. Vegas Trade (VT)
  3. Ghost Trade
  4. Hook From Extreme (HFE)
  5. Trend Line Break (TLB)
  6. Horizontal Trend Line Break (HTLB)

   

Again, when new to Woodies CCI you should only take trend trades. Do not take counter-trend trades. You will notice that some of the trades are both trend and counter-trend type trades. If you are new then you just take that pattern when and only when you see it develop in the direction of your trend.

You will learn all of these patterns later in this document. They are all just simple CCI patterns defined by Woodie that you will learn to spot on your charts in order to take a trade. Using Woodies CCI patterns instead of everything else allows you to forget all the ‘knowledge’ you have about trading, take advantage of the momentum of the market movements and, more often, beat other traders into and out of the market by one or more bars. All this is done without emotions, guessing or confusion about whether you should be in or out of a trade. Simple as that.

 

 


 

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