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Commodity Channel Index (CCI) Forex Technical Analysis and CCI Forex Trading Signals

Developed by Donald Lambert

 

The Commodity Channel Index measures the variation of a commodity price from its statistical mean/statistical average.

 

This indicator is an oscillator which oscillates between high levels and low levels

 

When the CCI is high it shows that price is unusually high compared to the its average.

 

When the CCI is low it shows that price is unusually low compared to the its average.

 

Commodity Channel Index indicator

 


Forex Technical Analysis and Generating Forex Trading Signals

 

Overbought/ Oversold Levels

The CCI typically oscillates between ±100.

 

Indicator values above +100 indicate an overbought conditions and an impending market correction.

 

Indicator values below -100 indicate an oversold conditions and an impending market correction

 

 

Buy Signal

If the Commodity Channel Index is oversold, levels below -100, then there is a pending market correction.

 

The oversold levels will remain intact until CCI starts to move above -100.

 

When price starts moving above -100 then that is interpreted as a buy.

 

The Commodity Channel buy signal should be combined with a trend line break signal to confirm the buy.

Buy Trade

 

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Sell Signal

If the  Commodity Channel Index is overbought, levels above +100, then there is a pending market correction.

 

The overbought levels will remain intact until CCI starts to move below +100.

 

When price starts moving below +100 then that is a interpreted as sell.

 

This Commodity Channel sell signal should be combined with a trend line break signal to confirm the sell.

Sell Signal

Sell Trade


 

Divergence Trading

 

Bullish Divergence

Bullish divergence occurs when price is making new lows while the CCI is failing to surpass its previous low.

This is a bullish signal because the divergence will be followed by an upward market correction.

Bullish Divergence

 

 

Bearish Divergence

Bearish Divergence occurs when price is making new highs while the CCI is failing to surpass its previous high.

This is a bearish signal because the divergence will be followed by a downward market correction.

Bearish Divergence Signal

Technical Analysis

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