Commodity Channel Index (CCI) Forex Trading Technical Analysis & CCI Signals
Developed 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 & low levels
When the CCI is high it shows that price is unusually high compared to the its average.
When the CCI is low it shows that price is unusually low compared to the its average.
Forex Trading Analysis and Generating 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 Commodity Channel Index indicator is oversold, areas below -100, then there is a pending market correction.
Oversold levels will remain intact until Commodity Channel Index technical indicator starts to move above -100.
When 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 Signal
If the Commodity Channel Index is over bought, levels above +100, then there's a pending market correction.
The overbought areas will remain intact until Commodities Channel Index indicator starts to move below +100.
When 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.
CCI Trading Indicator Sell Signal
FX Trading Divergence Forex Trading
Bullish FX Trading Divergence Setup
Bullish divergence occurs when the price is making new lows while the Commodities Channel Index technical 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 Forex Trading Divergence Setup
Bearish Divergence forms when the price is making new highs while the CCI technical indicator 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 Forex Trading
