CCI Indices Technical Analysis and CCI Trade Signals
Developed by Donald Lambert
The Commodity Channel Index (CCI) gauges the fluctuations of a commodity price relative to its statistical average.
This indicator is an oscillator trading indicator which oscillates between high levels and low levels
A high reading on the Commodity Channel Index (CCI) indicates that the stock price is significantly elevated compared to its historical average.
When the CCI is low it shows that stock price is unusually low when it's compared & analyzed to its average.
Indices Technical Analysis and How to Generate Trading Signals
Over-bought/ Over-sold Levels
The Commodity Channel Index(CCI) CCI typically oscillates between ±100.
Indicator values above +a hundred indicate an overbought situations and an coming near near marketplace correction.
Indicator values below -100 indicate an over-sold conditions and an impending market correction
Buy Signal
If the CCI is in an oversold condition, indicated by levels below -100, a market correction is likely to occur.
The oversold areas will remain intact til Commodity Channel Index indicator starts to move above -100.
When price starts and begins moving above -100 then that is interpreted as buy.
The Commodity Channel buy signal necessitates corroboration via a simultaneous trend line break confirmation signal to validate the purchase opportunity.
Buy Trade
Sell Signal
If the Commodity Channel Index(CCI) is overbought, levels 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 the price begins to move below +100, it is interpreted as a sell signal.
This Commodity Channel sell signal should be combined with a trend-line break signal to confirm the sell.
Sell Trade
Divergence Trading
Bullish Stock Divergence Trading Setup
Bullish divergence occurs when price is making/forming 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 upward market correction.
Bearish Indices Divergence Setup
Bearish Divergence occurs when price makes successively higher peaks, but the CCI fails to achieve a new high relative to its preceding peak.
This divergence warns of bears. A price drop follows to correct the market.
Technical Analysis in Indices Trade
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