Commodity Channel Index (CCI)*

Commodity Channel Index (CCI) is an oscillator indicator invented by D. Lambert for traders that fits very well into momentum analysis to determine cyclical trends. Originally only for Commodities (where it took its name from) but now regularly used for currency and equity trading. You can find potential peaks and valleys in the asset price and estimate changes in the direction of the price movement.

Also it can be used to find divergences from overbought/oversold price trends. CCI will give a value of between +100 and -100.

Calculation

We can find CCI by measuring the difference between the Price and the Moving Average Price divided by the mean Deviation:

CCI = Price - MS
0.015 x D

Where,


MA = Moving Average

D = Deviation

Signals
  • When the CCI is below the Overbought Line (-100) that indicates a good time to buy
  • When the CCI is above the Oversold Line (+100) that suggests time to sell