Commodity Channel Index (CCI):

With CCI formula the variation of a security's price is calculated from its statistical mean. It gives a valuable measurement of the overall trendiness of a market. The faster the CCI is accelerating, the more strongly the market is trending.

Oversold below -100, overbought above +100.

Buy signal: when the CCI moves back above -100. Sell signal: when the CCI moves back below +100.

Divergences: positive divergence below -100 increase the robustness of a buy signal; negative divergence above +100 increase the robustness of a sell signal.

Trendlines (connecting the peaks and troughs): From oversold levels, an advance above -100 and trendline breakout could be considered bullish. From overbought levels, a decline below +100 and a trendline break could be considered bearish.

Chaikin Money Flow (CMF):

Compares total volume to the closing price and the daily highs and lows to determine how many issues are bought and sold of a particular security. It is based upon the assumption that a bullish stock will have a relatively high close price within its daily range and have increasing volume.

Readings above +.10 (+10%) indicate accumulation/buying pressure and readings below -.10 (-10%) indicate distribution/selling pressure.

This indicator is best used in conjunction with traditional technical analysis and other indicators. Divergences can be used too, but it is usually best to wait for a cross of the zero line for confirmation.

ZigZag w.Retracements

The ZigZag can be used to measure primary price movements. As opposed to a correction or reaction rally, a primary price movement is in the direction of the underlying trend. Instead of retracing a portion of the previous move, primary moves extend past the previous reaction high or low.

After an advance, it is common for a security to retrace a portion of its advance with a correction. After a decline, it is common for a security to retrace part of its decline with a reaction rally. According to Dow Theory, 1/3, 1/2 and 2/3 retracements are most likely. Based on Fibonacci numbers, 38.2% or 61.8% retracement levels are deemed significant.

The ZigZag has zero predictive power and draws lines base on hindsight. Any predictive power will come from applications such as Elliott Wave or Fibonacci retracements and projections.

TA Examples, P#1         TA Examples, P#3