CCI Indices Technical Analysis & CCI Trading Signals
Developed by Donald Lambert
Commodity Channel Index measures the variation of a commodity stock indices price from its statistical mean ( statistical average ).
This stock indices indicator is an oscillator which oscillates between high levels & low levels
When the CCI is high it shows that stock indices price is unusually high when it is compared to its average.
When the CCI is low it shows that stock indices price is unusually low when it is compared to its average.
Indices Technical Analysis and How to Generate Trading 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 Trading Signal
If the CCI indicator is over-sold, areas below -100, then there is a pending market correction.
The over-sold areas will remain intact until Commodity Channel Index indicator starts to move above -100.
When stock indices trading price starts moving above -100 then that is interpreted as a buy.
The Commodity Channel buy stock indices trading signal should be combined with a indices trend-line break signal to confirm the buy.
Buy Trade
Sell Trading 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 stock indices trading price starts moving below +100 then that is a interpreted as sell.
This Commodity Channel sell stock indices trading signal should be combined with a indices trend-line break signal to confirm the sell.
Sell Trade
Divergence Indices Trading
Bullish Stock Indices Trading Divergence Setup
Bullish divergence occurs when stock indices trading price is making new lows while the CCI is failing to surpass its previous low.
This is a bullish trading signal because the divergence will be followed by an upwards market correction.
Bearish Indices Trading Divergence Setup
Bearish Divergence occurs when stock indices trading price is making new highs while the CCI is failing to surpass its previous high.
This is a bearish trading signal because the divergence will be followed by a downwards market correction.
Technical Analysis in Stock Indices Trading