A bullish divergence occurs when the underlying security makes a lower low and CCI forms a higher low, which shows less downside momentum. Second, securities can continue moving higher after an indicator becomes overbought. Namespaces Page Discussion.
It is important to wait for these crosses to reduce whipsaws should the trend extend. Likewise, securities can continue moving lower after an indicator becomes oversold. Investing Commodities. High positive readings indicate that prices are well above their average, which is a show of strength.
Why Fidelity. A move that exceeds this range shows unusual strength or weakness that can foreshadow an extended move.
Your email address Please enter a valid email address. The indicator is unbound and therefore, prior overbought and oversold levels may have little impact in the future. This makes interpreting an overbought or oversold condition subjective.
Time and time again it is demonstrated how important momentum is when analyzing the market and attempting to determine future moves. Sets the number of decimal places to be left on the indicator's value before rounding up.
Therefore, the indicator is best used in conjunction with price analysis and other forms of technical analysis or indicators to help confirm or reject CCI signals. Zoom out on the chart to see lots of price reversal points, and the CCI readings at those times.
The stock peaked on 11-Jan and turned down. All Rights Reserved.
Similarly, bullish and bearish divergences can be used to detect early momentum shifts and anticipate trend reversals. The same concept applies to an emerging downtrend. Can toggle the visibility of the CCI as well as the visibility of a price line showing the actual current price of the CCI.