CCI Analysis and CCI Signals

Developed by Donald Lambert

Commodity Channel Index measures the variation of a commodity stocks 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 portrays that price is unusually high compared to the its average.

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

Technical Analysis & How to Generate Trade Signals

Overbought/ Oversold Levels

The CCI typically oscillates between ±100.

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

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

Buy Signal

If the CCI indicator is oversold, areas below -100, then there is a pending market correction.

The oversold areas will remain intact until Commodity Channel Index indicator starts to move above -100.

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

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

Buy Trade

Sell Signal

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

Over bought levels will remain intact until CCI indicator starts to move below +100.

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

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

Sell Trade

Divergence Stock

Bullish Divergence Setup

Bullish divergence forms when price is making 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 Stock Trade Divergence 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 downwards market correction.

Analysis in Stocks