Commodity Channel Index - CCI Technical Analysis and Commodity Channel Index Signals
Created by Donald Lambert
The Commodity Channel Index measures the variation of a commodity price from its statistic mean/statistical average.
This indicator is an oscillator technical indicator which oscillates between high levels and low levels
When the CCI is high it portrays that price is unusually high compared to the its average.
When the CCI is low it illustrates that price is unusually low compared to the its average.
Technical Analysis and How to Generate Signals
Over-bought/ 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 & an impending market correction
Buy Trade Signal
If the CCI trading indicator is over-sold, areas below -100, then there is a pending market correction.
The oversold areas will remain intact until CCI trading indicator starts to move above -100.
When price begins moving above -100 then that is interpreted as buy.
The Commodity Channel buy signal should be combined with a trend line break signal to confirm the buy.
Buy Trade
Sell Trade Signal
If the CCI is overbought, zones above +100, then there is a pending market correction.
Over bought levels will remain intact until CCI trading indicator starts to move below +100.
When price begins 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 Trade
Divergence Trading
Bullish Trade Divergence Setup
Bullish divergence forms when price is forming new lows while the CCI indicator is failing to surpass its previous low.
This is a bullish signal because the divergence will be followed by an upward market correction.
Bearish Divergence Trading Setup
Bearish Divergence occurs when price is making new highs while the Commodities Channel Index indicator is failing to surpass its previous high.
This is a bearish signal because the divergence will be followed by a downward market correction.
Technical Analysis in Forex Trading
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