Technical Analysis : Commodity Channel Index

Commodity Channel Index Technical Indicator (CCI) measures the deviation of the commodity price from its average statistical price. High values of the index point out that the price is unusually high being compared with the average one, and low values show that the price is too low. In spite of its name, the Commodity Channel Index can be applied for any financial instrument, and not only for the wares.

There are two basic techniques of using Commodity Channel Index:

  1. Finding the divergences
    The divergence appears when the price reaches a new maximum, and Commodity Channel Index can not grow above the previous maximums. This classical divergence is normally followed by the price correction.

  2. As an indicator of overbuying/overselling
    Commodity Channel Index usually varies in the range of ±100. Values above +100 inform about overbuying state (and about a probability of correcting decay), and the values below 100 inform about the overselling state (and about a probability of correcting increase).



Technical Indicator Commodity Channel Index - CCI

Calculation

  1. To find a Typical Price. You need to add the HIGH, the LOW, and the CLOSE prices of each bar and then divide the result by 3.

    TP = (HIGH + LOW +CLOSE)/3

  2. To calculate the n-period Simple Moving Average of typical prices.

    SMA(TP, N) = SUM[TP, N]/N

  3. To subtract the received SMA(TP, N) from Typical Prices.

    D = TP — SMA(TP, N)

  4. To calculate the n-period Simple Moving Average of absolute D values.

    SMA(D, N) = SUM[D, N]/N

  5. To multiply the received SMA(D, N) by 0,015.

    M = SMA(D, N) * 0,015

  6. To divide M by D

    CCI = M/D

Today

  • 16/7/2007

EURO

(EURO)

The European currency hit new records last week at the level of 1.3820s, this move is considered as an extension to the upside move with pure bullish technical signs towards the upside. Today the Euro is expected to rest where it might drop towards the downside slightly. Nevertheless; the main move for this week is expected to be towards the upside with new records.

The trading range for today might be between the key resistance level at 1.3840 and the key support level at 1.3760.


The general trend is up as far as 1.3420 remains intact targets now at 1.3840 and 1.3960.

Support 1.3760 1.3735 1.3715 1.3683 1.3660
Resistance 1.3805 1.3824 1.3847 1.3877 1.3890

Recommendation

 We expect selling Euro below 1.3800 with a target at 1.3760, stop loss above 1.3840

GBP

Great British Pound(GBP)

The British pound arranged a bullish pattern last Friday by which it moved towards the key resistance level at 2.0370s, due to that the pound is expected to drop down today ina slight correction, since it got in an over-bought area.

The trading range for today might be between the key resistance level at 2.0400 and the key support level at 2.0270.


The general trend is up as far as 1.9900 remains intact targets now at 2.0440 and 2.0520.

Support 2.0310 2.0280 2.0255 2.0223 2.0200
Resistance 2.0345 2.0370 2.0392 2.0414 2.0430

Recommendation

 We expect selling sterling below 2.0370 with a target at 2.0300, stop loss above 2.0420

JPY

Japanese Yen(JPY)

The dollar against the Japanese yen managed to move in a bearish pattern last Friday since it has gathered enough level of bearish momentum, the strong support level just stopped the pair bearish drop at 121.90s, today the pair is expected to remain quiet without any key movement.

The trading range for today will be between the key resistance at 122.40 and the key support at 121.00.


The general trend is down as far as 124.60 remains intact, targets at 120.70 and 119.30.

Support 122.00 121.83 121.60 121.35 121.08
Resistance 122.20 122.50 122.70 122.90 123.12

Recommendation

 ...

CHF

SWISS Frank(CHF)

The dollar against the SWISS Frank moved in a balanced trend within the key resistance at 1.2050s and key support at 1.1980s. Today the pair is expected to remain neutral with tendency towards the upside.

The trading range for today will be between the key resistance at 1.2050 and the key support at 1.1950.


The general trend is down as far as 1.2540 remains intact, targets at 1.1875 and 1.1665

Support 1.2023 1.2000 1.1982 1.1960 1.1943
Resistance 1.2047 1.2080 1.2105 1.2135 1.2155

Recommendation

 ...

CAD

Canadian Dollar (CAD)

The dollar against the Canadian Dollar found a slight tendency towards the upside last Friday after a busy bearish week, Today the pair is expected to stay within the same ranges due to the low trading volume.

The trading range for today will be between the key resistance at 1.0520 and the key support at 1.0430.


The general trend is down as far as 1.0850 remains intact, targets will be at 1.0478 and 1.0320

Support 1.0435 1.0415 1.0385 1.0360 1.0338
Resistance 1.0480 1.0520 1.0540 1.0562 1.0587

Recommendation

 ...