Commodity Channel Index (CCI) 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 & 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.
FX Technical Analysis & How to Generate 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 FX Trading 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
Sell FX Trading 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 Trade
Forex Divergence Trading
Bullish FX Trading 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 upwards market correction.
Bearish Forex Trading Divergence Setup
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.
Technical Analysis in FX Trading
