Coppock Curve Commodity Trading Technical Analysis & Coppock Curve Trading Signals

Developed by Edwin Sedgwick Coppock

This commodity technical technical indicator was used for technical analysis of Stocks & Commodities Trading in the beginning but was later used to trade Commodity Trading.

The principle behind this is the psychology of trading, based on the theory that human habit is predictable. And commodity price movement always oscillates in a zigzag manner.

The principle of adaptation-level applies to how commodity price reacts at certain levels, stock and commodity prices will react in the same way or pattern as those observed historically.

Commodity Trading Technical Analysis & How to Generate Signals

In commodity trading, The moving average is the simplest form of an adaptation-level, the commodity price will oscillate around the moving average. This forms the basis of this indicator, which is a longer term oscillator based on this adaptation-levels(moving average), but in a different way.

Oscillators usually begin by calculating a % change of the current commodity price from some previous commodity price point, where the previous commodity price point is the reference point (adaptation-level).

Edwin Coppock reasoned that the commodities trading market participants' emotional state could be quantified by summing up the % changes over the recent past to get a general sense of the commodities trading market's longer term momentum.

For example, If we compare commodity prices relative to a year ago and we see that this month the commodities trading market is up 20% compared to a year ago, last month it was up 15% over a year ago, & 10%, 7.50% and 5% respectively the months before that, then we may ascertain that the commodities trading market is gaining momentum.

Basic signals can also be generated using the Coppock Curve to trade market reversals from extreme commodity price levels. Looking for divergence and commodity trend line breaks may also be combined to confirm the signal.

Implementation

The input levels of this indicator might need to be adjusted to better fit the dynamic nature of the commodities trading markets trading.

Coppock Curve has a zero line reference point, but this doesn't represent the adaptation-level but it is only a visual reference point only.