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Alison Heyerdahl
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Author
Alison Heyerdahl
Edited by
Alison Heyerdahl
Head of Content

Alison Heyerdahl is the Head of Content at FxScouts and a financial writer with extensive experience in Forex trading, broker analysis, and market research. She has reviewed 100+ brokers, publishes weekly YouTube trading videos, and co-hosts the “Let’s Talk Forex” podcast to help traders make informed, safe decisions.

Learn more about Alison Heyerdahl
Author
Author
Chris Cammack
Partner Manager and Financial Writer

Chris Cammack is the Partner Manager and a financial writer at FxScouts. Chris builds and maintains our relationships with our partners to provide our users with the best Forex trading experience.

Learn more about Chris Cammack

Commodity Channel Breakouts

Reading time: 2 min | Intermediate | Technical Analysis

The Commodity Channel Index (CCI) was first developed for trading commodities but can be used for trading currencies as the market is a highly liquid one.  The CCI was created by Donald Lambert in 1980 to identify cycles on the commodity market, as they believed that the highs and lows of every cycle could be predicted in advance. Commodity Channel Index is used as a momentum oscillator on the Forex market, to identify overbought and oversold conditions, bullish and bearish divergences, detect momentum shifts earlier and to anticipate trend reversal.

CCI-Indicator

Figure 1: The CCI Indicator

Commodity Channel Breakouts Strategy

The Forex market exhibits a lot of false breakouts, which makes it difficult for beginner traders to successfully trade these patterns.  It is common to see a situation where there has been a breakout, the trader buys in, the market then reverses back into the previous range, and the trade closes at a loss. The CCI indicator is extremely sensitive to the constant changes in price, and it’s a good measure of momentum.  If the CCI indicator shows a reading above +100 it indicates that momentum is to the upside, and when the CCI indicator shows a reading below -100 the momentum is to the downside. To successfully trade the Commodity Channel Breakout strategy use these steps:

Buy Setup Rules

  1. Only use the Daily or the 1H chart using the CCI standard input of 20.
  2. Look at the chart and find the last time the CCI broke above +100, before dropping down back below the +100 and record that measurement.
  3. Buy when the market has a new CCI reading above +100 and breaks above the previously recorded reading from step 2.
  4. Put your stop loss below the breakout candle.
  5. Take partial profit once the market moves the same amount as your risk threshold, and move your stop loss to your breakeven.
  6. Take profit on the second half of the trade once the market moves to two times your risk threshold.

Sell Setup Rules

  1. Only use the Daily or the 1H chart using the CCI standard input of 20.
  2. Look at the chart and find the last time CCI broke below -100 before breaking above the -100 and record that measurement.
  3. Sell at the market once a new CCI reading goes below -100 and breaks below the previously recorded reading from step 2.
  4. Put your stop loss above the breakout candle;
  5. Take partial profit once the market moves the same amount as your risk threshold, and move your stop loss to your breakeven.
  6. Take profit on the second half once the market moves to two times your risk threshold.

Trading Examples

Let's look at two examples of trading with commodity channel breakouts, one in a short trade example and one in a long trade. 

Short Trade Example

Figure 2 is an example of a short signal.  After a new low in momentum represented by the CCI indicator, the prevailing bearish trend continued to extend to the downside and the total potential profit from this trade was only 35 pips after we were stopped at breakeven in the second half of our trade. But the trend clearly remained bearish after the stops were triggered.

Figure 2: EUR/USD 1H Chart

Figure 2: EUR/USD 1H Chart

Long Trade Example

A long trade example is shown in Figure 3.  In this case, the market reached both targets. A new high in CCI momentum was the trigger for an explosive move in GBP/USD which demonstrates the very high level of accuracy of using the Commodity Channel Breakout strategy in timing trades on the FX market.

Figure 3: GBP/USD 1H Chart

Figure 3: GBP/USD 1H Chart

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Meet the Experts Behind Our Unbiased Reviews

Chris Cammack

Partner Manager and Financial Writer

Chris Cammack
Chris Cammack is partner manager and senior financial writer at FxScouts, specialising in broker relations and forex market analysis. As the former Head of Content (2019–2024), he set editorial standards for all content published at FxScouts, including broker reviews, broker comparison pages and education. With over a decade of experience in editorial management and partner relations, Chris builds and maintains our relationships with our partners to provide the best Forex trading experience for our users. He also co-hosts the “Let’s Talk Forex” podcast with Alison Heyerdahl, where he explores trading strategies, industry news, and macroeconomic trends to help traders navigate the markets with confidence.

Alison Heyerdahl

Head of Content

Alison Heyerdahl
Alison Heyerdahl is the Head of Content at FxScouts and an experienced financial writer with extensive hands-on experience in the Forex trading industry. She specialises in Forex trading, broker analysis, and market research, with a focus on helping traders navigate the complex world of online trading safely and confidently. Alison has tested and reviewed more than 100 Forex brokers, assessing everything from regulatory status and trading conditions to platform features and customer support. Her goal is to provide honest, detailed, and practical insights that traders can rely on when choosing a broker. She’s also produced more than 100 educational videos for the FxScouts YouTube channel, where she explains trading concepts in a clear, accessible way. As the co-host of the “Let’s Talk Forex” podcast, Alison shares expert commentary on broker reliability, trading strategies, and market developments—always with a focus on transparency and trader protection.

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Financial Writer

Ida Hermansen
Ida is a financial writer with a passion for cryptocurrencies, blockchain networks, and Forex trading. A dedicated crypto trader, she developed a deep interest in Forex technical analysis and price action, continually expanding her expertise in market trends and trading strategies. With a background in digital marketing, SEO, and content strategy, Ida combines her analytical skills with clear, engaging writing to help traders navigate the ever-evolving financial markets. She stays up to date with the latest Forex and crypto developments, researching the best trading environments for new and experienced traders alike.

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Financial Writer

Stefan de Clerk
Stefan is a financial writer and Forex trading enthusiast with over a decade of experience creating in-depth content on finance and technology. His deep interest in geopolitical events, big data, and market sentiment fuels his passion for analyzing how global factors shape financial markets. With a background in marketing and financial research, Stefan believes that Forex trading offers the best insight into the pulse of the world economy. Committed to delivering well-researched, unbiased, and objective information, he helps traders navigate the markets with clarity and confidence.
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