What's Choppiness Index Indicator Buy Signal and Sell Signal?
Choppiness Index Indicator Buy Signal
How Do I Generate Forex Buy Signal Using Choppiness Index Indicator
Steps on how to generate forex buy signals using Choppiness Index indicator:
This Choppiness Index indicator buy signal tutorial explains how to generate forex buy signals using the Choppiness Index indicator as illustrated below:
How to Generate Forex Buy Signals Using Choppiness Index Indicator
Choppiness Index Indicator Sell Trading Signal
How Do I Generate Forex Sell Signal Using Choppiness Index Indicator
Steps on how to generate forex sell signals using Choppiness Index indicator:
This Choppiness Index indicator sell signal tutorial explains how to generate forex sell signals using the Choppiness Index indicator as shown below:
How to Generate Forex Sell Signals Using Choppiness Index Indicator
Choppiness Index was designed to be an easy but practical indicator to help traders to determine if the currency prices are trending or consolidating.
This Indicator is similar to ADX which is also designed to evaluate the strength or momentum of a trend & determine if the market is trending or consolidating.
The Choppiness Index uses a scale of between 0 & 100. It also typically uses upper & lower bands at 61.8 & 38.2 respectively.
This indicator is plotted by first calculating the true range for each period & then adding the values of n-periods.
Second, it calculates the highest value & lowest value over n-periods and calculates their difference.
Third, it divides the sum of the true ranges & calculates the base-10 logarithm of this value.
Finally, it divides this value by base-10 logarithm of n price periods & multiplies the results by 100.
Technical Analysis and How to Generate Signals
Choppiness Index is a directionless indicator meaning it doesn't determine in which direction the market is moving.
Its basic principle is that the more heavier the market is trending over the last number of n-periods the closer to zero Choppiness Index indicator will be and the more heavily the market is consolidating that's moving sideways in a range or chopping manner, over the last n-periods the closer to 100 the Choppiness Index will be.
Indicator values of above 61.8 indicate that the market is ranging/ choppy (moving sideways & consolidating).
Higher values occur during/after a strong consolidation phase. Higher values could also be interpreted as a signal of a potential upcoming break out after a significant consolidation has occurred.
Choppiness Index values of below 38.2 indicate that the market is trending.
Lower values occur during/after a strong trending phase. Lower values could also be interpreted as a signal of a potential upcoming consolidation and choppiness after a strong trend phase has occurred.
