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 specific tool functions as an oscillator indicator, fluctuating between identifiable high thresholds and low thresholds.
A high reading on the Commodity Channel Index (CCI) indicates that the stock price is significantly elevated compared to its historical average.
A low CCI reading indicates that the stock price is exceptionally low when benchmarked and assessed against its historical average value.
Indices Technical Analysis and Methods 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 readings will persist until the Commodity Channel Index indicator begins to ascend above the -100 threshold.
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) registers an overbought condition, indicated by levels surpassing +100, an impending market correction is anticipated.
Overbought levels stay in place until the CCI indicator drops 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
A bearish divergence materializes when the price establishes new lows, yet the CCI fails to break below its preceding trough.
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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