CCI Technical Analysis and CCI Signals

Developed by Donald Lambert

The Commodity Channel Index measures the variation of a commodity stock index price from its statistical mean(statistical average).

This technical indicator is an oscillator which oscillates between high levels & low levels

When the CCI is high it portrays that stock index price is unusually high when compared to its average.

When the CCI is low it portrays that stock index price is unusually low compared to its average.

Technical Analysis & Generating Indices Signals

Overbought/ Oversold Levels

The CCI typically oscillates between ±100.

Indicator values above +100 indicate an overbought conditions and an impending market correction.

Indicator values below -100 indicate an oversold conditions and an impending market correction

Buy Stock Indices Signal

If the Commodity Channel indicator is oversold, areas below -100, then there is a pending market correction.

Oversold levels will remain intact until Commodity Channel technical indicator starts to move above -100.

When stock index price starts moving above -100 then that is interpreted as a buy.

The Commodity Channel buy signal should be combined with a trendline break signal to confirm the buy.

Buy Trade

Sell Indices Signal

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

Overbought areas will remain intact until CCI indicator starts to move below +100.

When stock index 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 Stock Indices

Bullish Indices Trade Divergence Setup

Bullish divergence forms when price is making new lows while the CCI indicator 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 Stock Trade Divergence Setup

Bearish Divergence forms when price is making new highs while the CCI indicator is failing to surpass its previous high.

This is a bearish trading signal because the divergence will be followed by a downward market correction.

Analysis in Indices Trading