Commodity Channel Index – Learn Why This Is Such A Popular Analysis Tool

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The Commodity Channel Index (CCI) is one of the more popular indicators that attempts to offer buy and sell signals; the CCI also is used to identify overbought and oversold areas of price action.

The CCI is calculated so that roughly 75% of price movement should be between +100 (overbought) and -100 (oversold).

An example of how a trader might use the CCI for potential buy and sell signals is given below in the chart of the E-mini S&P 500 Futures contract:

commodity channel index or CCI potential buy and sell signals


Commodity Channel Index Potential Buy Signal

  1. Commodity Channel Index (CCI) is below oversold line (-100).
  2. CCI then crosses above the oversold line.

Commodity Channel Index Potential Sell Signal

  1. Commodity Channel Index (CCI) is above overbought line (+100).
  2. CCI then crosses below the overbought line.

The Commodity Channel Index (CCI) attempts to signal overbought and oversold conditions that might be used by a trader to buy and sell.

How to Get Started Trading Commodities

If you are interested in trading using technical analysis, have a look at our reviews of these regulated brokers to learn which tools they offer:

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73.90%-89.00% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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