CCI Analysis & CCI Trading Signals

Developed by Donald Lambert

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 highlights that crude price is unusually high when compared to its average.

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

Oil Analysis & How to Generate 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's a pending market correction.

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

When crude 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's a pending market correction.

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

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

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

Sell Trade

Divergence Oil

Bullish Oil Divergence Setup

Bullish divergence occurs when crude 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 Oil Divergence Setup

Bearish Divergence occurs when crude 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 down-wards market correction.

Technical Analysis in Oil Trading