Woodie CCI Manual .pdf - Content
Chart 1 below shows a single yellow horizontal line. This is called the Zero-line (ZL). It has a special meaning in the calculation of the CCI. You may think of it as the equilibrium of momentum over a given period. All of Woodies CCI system trade patterns are defined around the zero-line. The chart shows four other lines. The light blue are the 100/-100 lines and the white are the 200/-200 lines.
Chart 2 shows the ZL as a series of red and green segments. These segments reflect the 25 period Least Squares Moving Average LSMA. When the segments on the ZL are green, this means that the market price is higher than the LSMA. When red, the market price is below the LSMA. This is also called the moving linear regression curve. The LSMA will be used in trade confirmation of patterns and exiting positions. It is not important to understand how the LSMA is calculated.