ByMilindParadkarTechnicalIndicatorisessentiallyamathematicalrepresentationbasedondatasetssuchasprice(high,low,open,close,etc.)orvolumeofsecuritytoforecastpricetrends.Thereareseveralkindsoftechnicalindicatorsthatareusedtoanalyseanddetectthedirectionofmovementoftheprice(formomentumtrading,meanreversiontradingetc).Tradersusethemtostudytheshort-termpricemovementsincetheydonotproveveryusefulforlong-terminvestors.Theyareemployedprimarilytopredictfuturepricelevels.Inthefollowingpost,Iwillhighlightsixtechnicalindicatorsthatarepopularlyusedinthemarketstostudythepricemovement.CommodityChannelIndexEaseofMovementMovingAverageRateofChangeBollingerBandsForceIndexTechnicalIndicatorsdonotfollowageneralpattern,meaning,theybehavedifferentlywitheverysecurity.Whatcanbeagoodindicatorforaparticularsecurity,mightnotholdthecasefortheother.Thus,usingatechnicalindicatorrequiresjurisprudencecoupledwithgoodexperience.Astheseanalysescanbedoneinpython,asnippetofcodeisalsoinsertedalongwiththedescriptionoftheindicators.Samplechartswithexamplesarealsoappendedforclarity.CommodityChannelIndexThecommoditychannelindex(CCI)isanoscillatorthatwasoriginallyintroducedbyDonaldLambertin1980.CCIcanbeusedtoidentifycyclicalturnsacrossassetclasses,beitcommodities,indices,stocks,orETFs.TradersalsouseCCItoidentifyoverbought/oversoldlevelsforsecurities.EstimationTheCCIlooksattherelationshipbetweenpriceandamovingaverage.StepsinvolvedintheestimationofCCIinclude:Computethetypicalpriceforsecurity.Thetypicalpriceisobtainedbyaveragingthehigh,lowandclosepricefortheday.Calculatethesimplemovingaverageofthetypicalpricesforthechosennumberofdays.Computethemeandeviationoftypicalpricesforthesameperiodasthatusedforthemovingaverage.TheformulaforCCIisgivenby:CCI=(Typicalprice–MAofTypicalprice)/(0.015*meandeviationofTypicalprice)0.015isLambert'sconstant.AnalysisCCIcanbeusedtodetermineoverboughtandoversoldlevels.Readingsabove+100canimplyanoverboughtconditionReadingsbelow−100canimplyanoversoldcondition.However,oneshouldbecarefulbecause