Commodity Channel Index

The Commodity Channel Index (CCI) is an indicator used in technical analysis of financial markets. Developed by Donald Lambert and introduced in his book "Commodities Channel Index: Tools for Trading Cyclical Trends" in 1980, the CCI indicator quickly made a name for itself amongst traders, and is today a staple in virtually all trading platforms. Although it was initially created to identify cyclical trends in commodities, it is now used for trading other markets as well, such stocks and currencies.The CCI, like the Relative Strength Index (RSI) is a momentum-based oscillator, possessing a middle line (value of zero), oscillating above and below this middle line with varying wavelength and frequency. How to Trade with CCIEven though you’ll find many books and tutorials telling you that the majority of oscillations take place within the range of +100 and −100, this does not automatically imply that anything above +100 is overbought and anything below -100 is oversold. Attempting to trade reversals based on these levels is very risky. Rather, traders would be better suited to apply a minimum range of +150 and -150 for overbought and oversold levels respectively. Ironically, the creator of the CCI, Donald Lambert, stated himself, “If the CCI goes above the + 100 line, that’s a signal to establish a long position. When the CCI drops below the + 100 line, the long position is closed out. The same techniques apply to short positions at the -100 line.” So how do we combine the above statement of Lambert, with the modern notion that the upper and lower levels of +100 and -100 are used as overbought and oversold levels? The first answer is, don’t use those levels as potential reversal zones, rather, select something higher as mentioned above. Secondly, if you insist on using them, then it’s essential to observe price action along with other technical skills and tools, such as divergences, where the direction of the CCI (or another indicator) is continuing against the direction of price itself. So, if other technical analysis tools are indicating a reversal is forming in conjunction with the +100/-100 overbought/oversold CCI levels, then this is the more likely scenario.However, if further analysis is showing a strong potential for trend continuation, then adhering to Lambert’s view is the more valid technique.
The Commodity Channel Index (CCI) is an indicator used in technical analysis of financial markets. Developed by Donald Lambert and introduced in his book "Commodities Channel Index: Tools for Trading Cyclical Trends" in 1980, the CCI indicator quickly made a name for itself amongst traders, and is today a staple in virtually all trading platforms. Although it was initially created to identify cyclical trends in commodities, it is now used for trading other markets as well, such stocks and currencies.The CCI, like the Relative Strength Index (RSI) is a momentum-based oscillator, possessing a middle line (value of zero), oscillating above and below this middle line with varying wavelength and frequency. How to Trade with CCIEven though you’ll find many books and tutorials telling you that the majority of oscillations take place within the range of +100 and −100, this does not automatically imply that anything above +100 is overbought and anything below -100 is oversold. Attempting to trade reversals based on these levels is very risky. Rather, traders would be better suited to apply a minimum range of +150 and -150 for overbought and oversold levels respectively. Ironically, the creator of the CCI, Donald Lambert, stated himself, “If the CCI goes above the + 100 line, that’s a signal to establish a long position. When the CCI drops below the + 100 line, the long position is closed out. The same techniques apply to short positions at the -100 line.” So how do we combine the above statement of Lambert, with the modern notion that the upper and lower levels of +100 and -100 are used as overbought and oversold levels? The first answer is, don’t use those levels as potential reversal zones, rather, select something higher as mentioned above. Secondly, if you insist on using them, then it’s essential to observe price action along with other technical skills and tools, such as divergences, where the direction of the CCI (or another indicator) is continuing against the direction of price itself. So, if other technical analysis tools are indicating a reversal is forming in conjunction with the +100/-100 overbought/oversold CCI levels, then this is the more likely scenario.However, if further analysis is showing a strong potential for trend continuation, then adhering to Lambert’s view is the more valid technique.

The Commodity Channel Index (CCI) is an indicator used in technical analysis of financial markets.

Developed by Donald Lambert and introduced in his book "Commodities Channel Index: Tools for Trading Cyclical Trends" in 1980, the CCI indicator quickly made a name for itself amongst traders, and is today a staple in virtually all trading platforms.

Although it was initially created to identify cyclical trends in commodities, it is now used for trading other markets as well, such stocks and currencies.

The CCI, like the Relative Strength Index (RSI) is a momentum-based oscillator, possessing a middle line (value of zero), oscillating above and below this middle line with varying wavelength and frequency.

How to Trade with CCI

Even though you’ll find many books and tutorials telling you that the majority of oscillations take place within the range of +100 and −100, this does not automatically imply that anything above +100 is overbought and anything below -100 is oversold.

Attempting to trade reversals based on these levels is very risky. Rather, traders would be better suited to apply a minimum range of +150 and -150 for overbought and oversold levels respectively.

Ironically, the creator of the CCI, Donald Lambert, stated himself, “If the CCI goes above the + 100 line, that’s a signal to establish a long position.

When the CCI drops below the + 100 line, the long position is closed out. The same techniques apply to short positions at the -100 line.”

So how do we combine the above statement of Lambert, with the modern notion that the upper and lower levels of +100 and -100 are used as overbought and oversold levels?

The first answer is, don’t use those levels as potential reversal zones, rather, select something higher as mentioned above.

Secondly, if you insist on using them, then it’s essential to observe price action along with other technical skills and tools, such as divergences, where the direction of the CCI (or another indicator) is continuing against the direction of price itself.

So, if other technical analysis tools are indicating a reversal is forming in conjunction with the +100/-100 overbought/oversold CCI levels, then this is the more likely scenario.

However, if further analysis is showing a strong potential for trend continuation, then adhering to Lambert’s view is the more valid technique.

Technical Analysis

Russell analysis and recap of trade ideas

Technical analysis and trade ideas review including Russell

Russell analysis and recap of trade ideas

  • The Russell 2000 technical analysis includes a trade idea with a unique way of how a trader can scale in a trade to create an attractive entry point.
Itai Levitan
Itai Levitan
Sunday, 04/09/2022 | 06:18 GMT-0
04/09/2022 | 06:18 GMT-0
Technical Analysis

S&P technical analysis in 10 seconds (including a trade idea)!

S&P technical analysis in 10 seconds

S&P technical analysis in 10 seconds (including a trade idea)!

  • I am taking a Long here with this double support area.
Itai Levitan
Itai Levitan
Thursday, 01/09/2022 | 07:13 GMT-0
01/09/2022 | 07:13 GMT-0
Technical Analysis

Russell 2000 technical analysis and trade idea (Long)

Russell 2000 technical analysis

Russell 2000 technical analysis and trade idea (Long)

  • An interesting spot for a Long trader, even with near term partial profit taking.
Itai Levitan
Itai Levitan
Tuesday, 30/08/2022 | 05:17 GMT-0
30/08/2022 | 05:17 GMT-0
Technical Analysis

Bitcoin technical analysis and trade idea follow-up: Respect the 20 day EMA

Signs during a trade: 20 EMA

Bitcoin technical analysis and trade idea follow-up: Respect the 20 day EMA

  • During our trade, we should watch for signs that align with our directional plan.
Itai Levitan
Itai Levitan
Wednesday, 17/08/2022 | 05:59 GMT-0
17/08/2022 | 05:59 GMT-0
Technical Analysis

Bitcoin technical analysis & trade idea (updated! See why we are aborting)

Bitcoin technical analysis

Bitcoin technical analysis & trade idea (updated! See why we are aborting)

  • See the previous technical analysis of BTCUSD and the trade idea to short it. Since then, relative technical strength from ETHUSD and an anticipation that this may lead to a rally in crypto, led to aborting the trade idea with a small loss. Traders can follow the trade idea and update to see an example of being agile in trading and cutting your losses short, in light of new technical evidence, even if it relates to a parallel asset that should affect your trade.
ForexLive
ForexLive
Saturday, 06/08/2022 | 20:41 GMT-0
06/08/2022 | 20:41 GMT-0