For this example, I will use the Commodity Channel Index
) for the study. The definition of the CCI
is that it is a measure of market or price strength. It gives us signs of Overbought and Oversold conditions in price action.The default settings are usually 14 or 20 periods (depending on your charting platform and personal choice) and obviously, this can be adjusted like any other technical indicator. I like to interpret the CCI
as a speedometer of the market, making it an ideal measure of momentum in prices. And perfect for my convergence and divergence analysis.