CCI Divergence Indicator
The CCI (Commodity Channel Index) Divergence Indicator is used to identify potential reversals in market trends by analyzing the divergence between the CCI values and the price action. To trade using this indicator, first, look for instances where the price forms new highs or lows while the CCI does not, creating a divergence (either bullish or bearish). A bullish divergence occurs when the price makes lower lows while the CCI makes higher lows, suggesting a potential upward reversal. Conversely, a bearish divergence occurs when the price makes higher highs while the CCI makes lower highs, indicating a possible downward reversal. Traders can enter positions based on these signals, ideally using additional confirmation from other indicators or price patterns, and should always employ proper risk management techniques.