The Woodies CCI indicator gets its name from the founder, Ken Woods, an independent trader. A Commodity Channel Index (CCI) indicator compares the current price with the average price for a selected period.
Traders use the Woodies CCI indicator to spot several tradable CCI patterns that go with and against the trend. The Woodies CCI indicator is thought of as a standalone indicator meaning the results do not need to be confirmed by other technical analysis tools. Check out tradingview’s advanced charting tools
Here are two signals that traders use when using the Woodies CCI indicator:
Zero Line Reject
Imagine a graph with a set line across a graph that is at a zero level. Imagine another line, a variable histogram bar line that goes up and down, above and below the zero level line. When the variable line stays above the zero level line, for a period of time, this means an ascending or buying trend.
When the line stays below the zero level line, a descending or selling trend is in progress. If the line starts to cross the zero line from top to bottom or bottom to top, this indicates the trend is changing.
Woodie CCI | Indicator Series Click To TweetReverse Divergence
The histogram bar line will have peaks and valleys over a period of time. If the peaks and valleys can be connected by a straight line, and the straight line is pointing towards the zero level line, this indicates a strong trend in the direction the straight line is pointing.
In other words, if the histogram bar line is below the zero level line but the straight line connecting the peaks and valleys is pointing up to the zero level line, this means that a strong ascending or buying trend is expected. If the straight line was pointing down towards the zero level line, a strong descending or selling trend is expected.
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