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I believe that many investors have this feeling: if they want to make money in the first place, in addition to the fundamental analysis of the macroeconomy, industrial policy, industry and company, many times they also need to use technical indicators to assist their timing and trading operations from a quantitative point of view.
When it comes to technical indicators, many people will think of **, MACD, KDJ, RSI, W&R, etc., each indicator has its own characteristics, which can help investors make decisions to a greater or lesser extent. However, there is a seemingly simple but not simple indicator, which is particularly popular - it is said to be simple because it is composed of only one line, which is concise and clear; It is not simple because it contains a lot of information and is quite instructive for human operation.
This indicator is the CCI.
The CCI indicator, also known as the homeopathic indicator, was proposed by Donald Lambert, a technical analysis expert in the United States, in the 80s of the last century, and was specially used to measure whether stock prices, foreign exchange or *** transactions have exceeded the normal distribution range. Compared with the 0 axis, fast line, and slow line of MACD, and the upper, middle and lower band of BOLL, the composition of CCI can be said to be much simpler, with only one indicator line (see figure below).
The CCI indicator was first used to judge the market, and then gradually applied to the market. Unlike most of the other technical analysis indicators invented by using the *** price, opening price, most or lowest price, the design principle of CCI is based on statistical logic, introducing the concept of the degree of deviation between the average range of the stock price and the fixed period, emphasizing the importance of the average absolute deviation of the stock price in the technical analysisOverbought and oversoldTechnical analysis indicators in the category.
What does overbought and oversold mean?
The so-called "overbought" means that it is easy to correct downward, which is equivalent to a bearish outlook, and it should be sold at this time; "Oversold" is oversold, easy to correct upward, which is equivalent to a bullish outlook, and it should be *** at this time
How should CCI metrics be used?
Generally speaking, on the presentation interface of the CCI indicator, the two dividing lines of +100 and -100 divide the entire indicator operation area into three parts, the area between the two dividing lines belongs to the normal fluctuation area of the indicator, and the above 100 line and below the -100 line belong to the abnormal range. And in practice, there are often the following techniques:
1) When the CCI breaks through +100 from the bottom to the top, the stock price may accelerate in the short term**, which can be considered at this time**;
2) When the CCI breaks +100 from above +100 to **, the short-term **trend of the stock price may end and tend to **, and it should be sold at this time;
3) When the CCI breaks -100 from top to **, the stock price may accelerate in the short term**, which is not appropriate at this time, and the position in the hand is also a time to sell;
4) When the CCI breaks through -100 from below -100 upwards, the short-term trend of the stock price may end and tend to **, which can be considered at this time.
Taking a large ** that appeared last year as an example, corresponding to the above four trading skills, we can clearly find the ** and the time to sell, so that we can get a more considerable profit from it.
It is worth mentioning that in the actual application of CCI indicators, there will also be top divergence and bottom divergence similar to MACD and other indicators.
The so-called top divergence refers to the fact that the stock price has hit a new high, but the indicator has not reached a new high, indicating that the strength of the stock price has weakened, the bulls tend to decay, and the bears gradually have an advantage, and the stock price may turn from rising to falling; On the contrary, it is the bottom divergence, that is, the stock price has hit a new low, but the indicator has not hit a new low, indicating that the stock price has weakened, the bears tend to decay, and the bulls gradually have an advantage, and the stock price may turn from falling to rising next.
Still taking the above big ** as an example, it can be clearly seen from the chart that the stock price is in the first trend, and continues to create new lows, but the CCI indicator has not created a new low, but is rising, which is the emergence of the CCI bottom divergence, at this time, you can consider dipping intervention; In the latter period, although the stock price hit new highs one after another, the CCI indicator has declined, which is the emergence of the CCI top divergence.
It should be pointed out that although many of the tips and trading methods of CCI indicators have been discussed above, it must be pointed out that technical indicators always lag behind market changes, and we should not be too superstitious or deify them. If you rely only on a technical indicator, it is likely that the results will not be as good as expected.
In the final analysis, if we want to obtain ideal returns, we still need to have a deeper understanding of the company's fundamentals, and on the basis of fully grasping the industry prospects and the company's intrinsic value, we should consider trading operations with technical indicators, so as to go further and more steadily on the road of investment, and enjoy the rich returns brought to us by compound interest.