Commodity Channel Index (CCI)

CCI has been developed by Donald Lambert; it designed to detect beginning and ending market trends & provides an indication of overbought or oversold markets.The CCI indicates the increasing in the prices compared to average prices as it moves towards +100. As the CCI drops towards -100, it indicates that the price is increasingly low compared to average prices.It provides a warning of overbought and oversold markets when the line crosses the +100 or the -100 levels. The actual buy or sell signal is usually provided, however, when the line then crosses back over the +100 or -100 level.Buy signals are generated when CCI dropped below -100 & then come back up through this level.Sell signals are generated when CCI dropped below +100 or make strong thrust above +100 & then dropped back up through this level.Zero line crossings it confirms buy or sell signals.

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Moving Average

Moving averages are one of the most popular, easy & used indicator in technical analysis & also it can be used as an overbought / oversold indicator.The term "Moving" refers to the method of calculation which takes the average value over a fixed period of time and adds the latest period data to the calculation of the average while dropping the first period of the calculation so that the average continues to be calculated by the same number of periods but moves with each new period of data that occurs.A 14 day moving average represents the trend in prices over a period of 14 days. A longer 50 day moving average is smoothed more than a 14 day moving average with each new day's data making less impact on the calculation of the moving average value than a shorter term moving average such as the 14 day moving average.In Moving average, if price is above the moving average it indicate bullish behavior. While when the prices are below the moving average it is an indication of bearish behavior in relation to the trend length being viewed.The signal of moving average is to buy when the securities price moves above its moving average and to sell when the price moves below its moving average.Types of moving averages on the chart:- Simple Moving Average (SMA)- Exponential Moving Average (EMA)- Smoothed Moving Average (SMMA)- Linear Weighted Moving Average (LWMA)

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Bollinger Bands

Developed by John Bollinger, Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period time. The indicator consists of three bands.The middle line is the simple moving average, normally set as a period of 20 (number of bar/ticks in a given time period), and is used as a base to create upper/lower bands. The upper band is the middle band added to the given deviation multiplied by a given period moving average. The lower band is the middle band subtracted by the given deviation multiplied by a given period moving averages.It used for determining whether current values of a data field are behaving normally or breaking out in a new direction also for identifying when trend reversals may occur.Using Bollinger Bands1) Trend – When price moves outside of the bands, it is believed that the current trend will continue.2) Volatility- The band will expand/contract as the price movement becomes more volatile/or becomes bound into tight trading patterns, respectively. 3) Determine Oversold/Overbought Conditions – When price continues to hit upper band, the price is deemed overbought (may suggest sell). When price continues to hit lower band, the price is deemed oversold (may suggest buy).

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Average Directional Movement Index

J Welles Wilder has developed the Average Directional Index (ADX) to define trend force, whether the trend will develop further or will gradually weaken.The simplest trading method based on the system of directional movement implies comparison of two direction indicators: the 14-period +DI (yellow) one and the 14-period –DI (Green). To do this, one either puts the charts of indicators one on top of the other, or +DI is subtracted from -DI. W. Wilder recommends buying when +DI is higher than -DI, and selling when +DI sinks lower than -DI.To these simple commercial rules Wells Wilder added "a rule of points of extreme". It is used to eliminate false signals and decrease the number of deals. According to the principle of points of extreme, the "point of extreme" is the point when +DI and -DI cross each other. - If +DI raises higher than -DI, this point will be the maximum price of the day when they cross. - If +DI is lower than -DI, this point will be the minimum price of the day they cross.The point of extreme is used then as the market entry level. Thus, after the signal to buy (+DI is higher than -DI) one must wait till the price has exceeded the point of extreme, and only then buy. However, if the price fails to exceed the level of the point of extreme, one should retain the short position.

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