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Section 2: Another way to use Oscillators

Oscillators can also be used to get in trades in direction of the trend on price pullbacks, using two oscillators of different periods. A short period oscillator is used to get overbought/oversold conditions while the longer period oscillator is used to get the direction of the trend. 

Chart

[Chart 1]

As you can see in the chart above, the longer period CCI (below) acts as a trend identification indicator as the formula calculates more periods for trend detection. The shorter period CCI acts as an overbought/oversold indicator. This kind of system is designed to take only those trades that are in direction of the trend (signaled by the longer period oscillator). 

If you add to this set-up the price behavior approach you will come up with a very interesting system – take a moment to place these indicators on your charting package and take look to see if this style could suit you. 

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