CCI Indices Technical Analysis and CCI Trading Signals

Created 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 and low levels

When the CCI is high it displays that stock price is unusually high when it's compared to its average.

When the CCI is low it displays that stock price is unusually low when it's compared to its average.

Indices Technical Analysis and 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 til 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 trend line break signal to confirm the buy.

Buy Trade

Sell Trade Signal

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

Over bought levels will remain intact til 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 trend line break signal to confirm the sell.

Sell Trade

Divergence Trading

Bullish Stock Divergence Setup

Bullish divergence occurs when 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 upward market correction.

Bearish Indices Divergence Setup

Bearish Divergence occurs when 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 Stock Indices Trading