The CCI indicator was originally based upon analysis and buying and selling commodities, but you can actually use for any of the markets like stocks, ETF, Forex, commodities, and futures. It can be used in two different ways, one is overbought and oversold. The other way is really more of a trend based indicator, when we are looking for big moves or big trends in the market. So, down below, if you notice there are few lines here. The default is 20-period, so that is 20 days on the daily chart. You can use this on different timeframes. We have this red line, which gives you the actual readings, and we have a line at 100, and a line at -100. The scale goes essentially to 200 and -200.
You can also have readings higher and lower than that. But for our purposes, what you want to do is when there is a move above 100 line, that is a bullish indication. As you can see we have this green arrow, which is a buy signal. And this red arrow corresponds with a move below the negative 100 there is bearish, and it is a sell signal. The way this is used for trend traders is that you want to see a move above 100 is considered bullish and a move below is considered bearish. That would correspond with buy and sell signals. So, this is a very useful tool. It can pinpoint trends or emerging trends in the market and you can use this on any of the markets as well.