CCI Divergence
When the Commodity Channel Index moves against price, hinting a move may be losing force.
CCI divergence is price and the Commodity Channel Index moving in opposite directions, hinting at fading momentum.
CCI divergence happens when price makes a new high or low but the Commodity Channel Index fails to confirm it. The mismatch suggests momentum is fading and a reversal may be near. It is one signal among many, so treat it as a warning rather than a trigger.
How It Works
- Price and the indicator disagree on the new extreme
- It warns momentum is running out
- It is most useful at swing extremes
Trading Tips
Combine it with a trendline or level for confirmation
Ignore divergence in a strong one-directional trend
Use it on a timeframe that matches your hold period
CCI Divergence Example
Say oil prints a fresh high while CCI peaks lower than its last top. Price extends $2 further over two sessions, then reverses $6 in a day. The divergence warned while price still looked invincible.
How Traders Use CCI Divergence
Treat CCI divergence as an exit prompt for longs, never a blind short. Confirm with price structure breaking first. Like all oscillator warnings, it times poorly and means greatly.
Related Terms
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