Homeopathic Indicators (CCI)
A homeopathic indicator (CCI) is a leading indicator designed to identify price reversals or short and sell shorts.
The basic principle is that prices tend to reverse periodically.
Using CCI in transactions
The CCI shows a range of -344.131 to + 374.525. The horizontal lines commonly used to determine short and sell short phenomena are 100 and -100, respectively.
If the CCI exceeds 100, it indicates that the market is short.
If the CCI is below 100, the market is sold short.
The CCI in the chart below appears in the lower region of the price movement.
CCI is calculated by averaging the highest, lowest, and closing prices over several periods (standard 14). This is called the true price (TP). Take a simple moving average of 20 periods to calculate, called SMATP. Next, calculate the standard deviation over 20 periods from SMATP and TP. Then, divide the difference between TP and SMATP by the product of the standard deviation multiplied by the constant value of 0.015.
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Disclaimer: The content of this article does not represent the views of the Institute of Foreign Exchange. The content is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.