Oscillators
CCI: Commodity Channel Index
CCI shows how far the price is from its recent average, in units of its usual deviation; readings above +100 or below −100 are unusually far.
The idea in plain words
Prices tend to swing around an average. CCI measures the current distance from that average and compares it with the typical distance, so a reading of +200 means "twice as far above average as usual".
How it is calculated
Uses the typical price (high + low + close) ÷ 3, its 20-period average, and the average absolute distance from that average. The constant 0.015 scales most readings to between −100 and +100.
TP = (high + low + close) ÷ 3
CCI = (TP − SMA(TP, N)) ÷ (0.015 × mean deviation) (default N = 14)How to use it
- Crossing above +100 can signal the start of a strong move up; below −100, a strong move down.
- In ranges, a turn back from above +100 or below −100 can mark a swing high or low.
- Divergence between CCI and the price warns of a weakening trend.
Drawing conclusions
- CCI has no upper or lower limit; values beyond ±200 happen in strong moves.
Example
Crude oil breaks out of a range and CCI jumps from 40 to 150. It stays above 100 for a week while oil rises; when it falls back below 100, the burst of momentum has ended.
Prices in examples are illustrative.
Watch out for
- "Overbought" readings can stay overbought in strong trends.
A little history
Donald Lambert introduced CCI in Commodities magazine in 1980 to find cycles in commodity prices; it is now used in every market.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.