Commodity Channel Index (CCI) calculations. 1) Find a typical price: add high, low and close of each bar and divide it by 3
TP = (High + Low + Close) / 3 2) Subtract SMA of the typical prices over n-periods, SMA (TP, N), from the typical prices (TP)
D = TP — SMA(TP, n) 3) Multiply SMA (D, N) by 0,015
M = SMA (D. n) * 0,015 4) The final value of the indicator
CCI = M / D The main signals for CCI:
Bullish divergence / bearish convergence is not always a signal of the weakness of the trend, but always quite accurately defines the beginning of the correction;
Under flat conditions exit from the overbought / oversold areais a sell (buy) signal.