8. CCI (COMMODITY CHANNEL INDEX)

 

 

◆ Dictionary meaning

An indicator that measures the change in stock price from the moving average of the average price

 

It is an indicator showing the strength and direction of the trend by indicating how far the recent price is from the moving average of the average price. The larger the absolute value of the index, the stronger the trend, and the smaller the absolute value, the weaker the trend.

 

 

◆ What is CCI Indicator?

 

When the CCI is in an uptrend, it progresses in a positive direction, and when it is in a downtrend, it progresses in a negative direction.

 

A negative value indicates a downtrend because it means that the current share price flow is lower than the average share price flow.

 

 

 

 

◆ Overbought/Oversold

 

Being in the overbought zone is a sign of a downtrend in the near future, and it is recommended to refrain from buying new ones.

 

Contrary

 

Being in an oversold zone is a sign that it is a good idea to refrain from selling as it is foreshadowing an upturn in the near future.

 

 

 

 

◆ Baseline trading section

Sell ​​when it crosses below +100 saloon basis

 

Buy when it breaks above the -100 line

 

 

 

 

 ◆ Practical trading

This is a real trading chart using the '0' line.

 

It is not necessary to immediately trade if it breaks below the '+100' line or crosses the '-100' line upward.

It is recommended to use the strategy of trading when the trend of the stock price is strong and the '0' line is maintained within the range that does not break and then the '0' line is strongly crossed.

 

 

 

 

◆ Practical trading

 

In an uptrend, the CCI line holds unless the '0' line is clearly broken.

A solid support heralds a bigger upside.

 

 

However, if the resistance level does not break through the '0' line, it will foretell a bigger decline, so it is recommended to set a suitable strategy.

 

 

 

 

◆ Branching phenomenon

 

It is about branching, which is always covered by other indicators.

In an uptrend, the high of the stock price rises, while the auxiliary indicator lowers the high.

 

This is a strong sell signal.