diff --git a/plugins/compound-engineering/skills/ce-update/SKILL.md b/plugins/compound-engineering/skills/ce-update/SKILL.md
index 18c90de..2210309 100644
--- a/plugins/compound-engineering/skills/ce-update/SKILL.md
+++ b/plugins/compound-engineering/skills/ce-update/SKILL.md
@@ -17,21 +17,28 @@ version, and fix stale marketplace/cache state if it doesn't. Claude Code only.
 
 ## Pre-resolved context
 
-The three sections below contain pre-resolved data. Only the **Plugin root
-path** determines whether this session is Claude Code — if it contains an error
+The sections below contain pre-resolved data. Only the **Plugin root path**
+determines whether this session is Claude Code — if it contains an error
 sentinel, an empty value, or a literal `${CLAUDE_PLUGIN_ROOT}` string, tell the
-user this skill only works in Claude Code and stop. The other two sections may
+user this skill only works in Claude Code and stop. The other sections may
 contain error sentinels even in valid Claude Code sessions; the decision logic
 below handles those cases.
 
+`CLAUDE_PLUGIN_ROOT` points at the currently-loaded plugin version directory
+(e.g. `~/.claude/plugins/cache/<marketplace>/compound-engineering/<version>`),
+so the plugin cache directory that holds every cached version is its parent.
+
 **Plugin root path:**
 !`echo "${CLAUDE_PLUGIN_ROOT}" 2>/dev/null || echo '__CE_UPDATE_ROOT_FAILED__'`
 
 **Latest released version:**
 !`gh release list --repo EveryInc/compound-engineering-plugin --limit 30 --json tagName --jq '[.[] | select(.tagName | startswith("compound-engineering-v"))][0].tagName | sub("compound-engineering-v";"")' 2>/dev/null || echo '__CE_UPDATE_VERSION_FAILED__'`
 
+**Plugin cache directory:**
+!`case "$(dirname "${CLAUDE_PLUGIN_ROOT:-}")" in */cache/*/compound-engineering) dirname "${CLAUDE_PLUGIN_ROOT}" ;; *) echo '__CE_UPDATE_CACHE_FAILED__' ;; esac`
+
 **Cached version folder(s):**
-!`ls "${CLAUDE_PLUGIN_ROOT}/cache/compound-engineering-plugin/compound-engineering/" 2>/dev/null || echo '__CE_UPDATE_CACHE_FAILED__'`
+!`case "$(dirname "${CLAUDE_PLUGIN_ROOT:-}")" in */cache/*/compound-engineering) ls "$(dirname "${CLAUDE_PLUGIN_ROOT}")" 2>/dev/null ;; *) echo '__CE_UPDATE_CACHE_FAILED__' ;; esac`
 
 ## Decision logic
 
@@ -56,12 +63,12 @@ Take the **latest released version** and the **cached folder list**.
 - Tell the user: "compound-engineering **v{version}** is installed and up to date."
 
 **Out of date or corrupted** — multiple cached folders exist, OR the single folder name
-does not match the latest version. Use the **Plugin root path** value from above to
-construct the delete path.
+does not match the latest version. Use the **Plugin cache directory** value from above
+as the delete path.
 
 **Clear the stale cache:**
 ```bash
-rm -rf "<plugin-root-path>/cache/compound-engineering-plugin/compound-engineering"
+rm -rf "<plugin-cache-directory>"
 ```
 
 Tell the user:
diff --git a/tests/skills/ce-update.test.ts b/tests/skills/ce-update.test.ts
new file mode 100644
index 0000000..179713e
--- /dev/null
+++ b/tests/skills/ce-update.test.ts
@@ -0,0 +1,32 @@
+import { readFileSync } from "fs"
+import path from "path"
+import { describe, expect, test } from "bun:test"
+
+// Regression guard for https://github.com/EveryInc/compound-engineering-plugin/issues/556.
+//
+// `CLAUDE_PLUGIN_ROOT` is set by the Claude Code harness to the currently-loaded
+// plugin version directory (e.g. `~/.claude/plugins/cache/<marketplace>/compound-engineering/<version>`).
+// It is NOT the plugins cache root. Appending `/cache/<anything>/compound-engineering/`
+// onto it produces a path that never exists, which causes the cache-probe to fail
+// and emit the `__CE_UPDATE_CACHE_FAILED__` sentinel on every healthy install.
+//
+// This has regressed twice. Fail fast if the antipattern reappears.
+
+describe("ce-update SKILL.md", () => {
+  const skillPath = path.join(
+    process.cwd(),
+    "plugins/compound-engineering/skills/ce-update/SKILL.md",
+  )
+  const body = readFileSync(skillPath, "utf8")
+
+  test("does not append a /cache/<marketplace>/ suffix onto CLAUDE_PLUGIN_ROOT", () => {
+    // Matches any `${CLAUDE_PLUGIN_ROOT}/cache/<segment>/` or `${CLAUDE_PLUGIN_ROOT}/cache/<segment>"`
+    // pattern. The harness variable is already under `cache/<marketplace>/`,
+    // so concatenating another `cache/...` segment is always wrong.
+    const antiPattern = /\$\{CLAUDE_PLUGIN_ROOT\}\/cache\//
+    expect(
+      antiPattern.test(body),
+      "ce-update/SKILL.md reintroduced the ${CLAUDE_PLUGIN_ROOT}/cache/... antipattern — derive the cache dir from dirname \"${CLAUDE_PLUGIN_ROOT}\" instead.",
+    ).toBe(false)
+  })
+})