【RCI×CCI×Volatility #03】The volatility indicates the “heat of the turning point”
This article is the third in the series “RCI×CCI×Volatility to Capture the Initial Reversal Move.”
In the first two installments, we introduced the idea of using RCI to grasp the “flow” and CCI to grasp the “momentum.”
This time, we focus on the “fuel” that moves those two—volatility (variability).
? Viewing the Market’s “Heat” Numerically
At the beginning and end of a trend, there is alwaysa change in energy.
Volatility is what expresses that numerically.
Specifically, ATR (Average True Range) and standard deviation are commonly used.
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Rising volatility → the market heats up, signaling a trend about to begin
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Falling volatility → direction is unclear, an energy-accumulation phase
If you can read this “heat wave,”
you gain material to judge the reliability of the signals shown by RCI and CCI.becomes a basis for judging reliability.
⚡Volatility Is the “Breath” of the Trend
If you compare the market to breathing, volatility is thedepth of breath.
In a shallow breath (low volatility) there are many false signals.
Conversely, when volatility rises as if taking a deep breath,
the market is preparing to move toward its next action.
In trading, it is important to catch the moment when the breath shifts from “calm” to “movement.”
? RCI×CCI×Volatility: A Trinity View
For example, in a situation like this?
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Short-term RCI rises from around −90 and reverses upward
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CCI rises from −100 and approaches the 0 line
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Volatility (ATR) begins to exceed its recent average
When these three coincide, it is the moment when the “heat of the initial reversal” is ignited.
RCI and CCI indicate the “direction,” while volatility indicates the “fuel amount.”
Therefore, when these three perspectives align,you can make trading decisions that overcome noise.
? How to Measure Volatility and Guidelines
The ATR is simple and recommended ( Bollinger Bands or volume are also OK).
Because you can visually see “how much moving” relative to the average,
it is the most straightforward aid for trading decisions.
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ATR surges → trend onset or possibility of a turning point
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ATR plunges → energy depleted, consolidation signal
In particular, when ATR is low but RCI and CCI give reversal signals,
that is likely a non-starting reversal = a false signal.
Being able to judge this alone can greatly reduce unnecessary entries..
? Tips for Use
Volatility should not be used alone to make trading decisions;
instead, use it as a filter to confirm whether the direction shown byRCI and CCI is genuine.
In other words,
RCI×CCI →Direction signal
Volatility →Reliability signal
By keeping this relationship in mind, you can build trades with higher reproducibility rather than just higher win rate.
? Next Time Preview
Next time, we will integrate the three elements discussed so far (RCI×CCI×Volatility) and
explain how to capture the initial reversal on actual charts.
The completed form of the “Triune Logic”—please look forward to it.
? Series Link
? Series List
#01：RCI×CCI×Volatility #01｜A new strategy to catch the instant of reversal
#02：RCI×CCI×Volatility #02｜The moment of momentum reversal seen by CCI
#03：【RCI×CCI×Volatility #03】Volatility’s “heat of turning” (this article)
#04：Reading the turning with RCI “time axis science” (coming soon)
? Introducing Reference Indicators
Part of the logic explained in this series is implemented in
the indicator I have published“Golden Turning Point Gold_RCI_Signal”.
How RCI, CCI, and volatility interlink to indicate reversals
If you want to see the behavior on actual charts, please refer to the following?
?【Golden Turning Point】Gold RCI Signal ─ The moment to catch the “reversal long” on the 5-minute chart
? Summary
RCI and CCI indicate the “direction,” and volatility shows its “heat.”
Understanding this Trinity logic allows you to numerically explain “why it moved here.”
Technical analysis is not luck,a skill to read the market’s breath.
The key to sensing that breath’s strength lies in volatility.