Tuesday, September 2, 2014

Technical Analysis Lesson for the Day (Sept. 3, 2014): The Commodity Channel Index or CCI

The Commodity Channel Index or CCI is one of the trading indicators that help traders decide whether to buy, or sell the stock picks they are eyeing on. It was developed by Ronald Lambert and was featured in the Commodities magazine in 1980. Barely 3 years before I was born.

70-80% CCI value falls between -100 and +100. It can also tell whether a stock's condition is oversold or overbought.

Anyway here is the formula I learned how I can enter a trade and get out of the trade using the CCI.

Consider strong momentum:
if CCI cross above +100, stock will be considered trending.
If CCI crosses below 0 sell
Once it crosses below -100 signals strong downtrend (sell)

Identify reversals:
-100 oversold wait till buy signal is generated
+100 sell signal when CCI moves back crossing 0

There you have it! I'm now learning to read the charts using this indicator.
Tomorrow or the next day I will share another indicator that I learned on Technical analysis.


I posted my financial adventure like this here because I noticed that after the 2,000th mark, nobody reads my posts anyway. This article does not constitute a recommendation or an offer to sell or a solicitation to buy any financial product and stocks.I'm an independent trader and not affiliated to any financial institute (Not anymore). I encourage you to do independent research for your judgment with respect to the matter contained from this site. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein.

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