Commodity Channel Index (CCI)
Oscillator measuring how far price deviates from its statistical mean; above +100 is strong momentum, below −100 suggests oversold.
Formula
CCI = (Typical Price − SMA(Typical Price, n)) / (0.015 × Mean Absolute Deviation)
The CCI compares the current typical price ((H + L + C) / 3) to a simple moving average of typical prices, then normalises by the mean absolute deviation. The constant 0.015 scales results so about 70–80 % of values fall within ±100.
Originally designed for commodities to identify cyclical turns, it now sees wide use on any market. Traders use extreme readings (±100 or ±200) to spot overbought/oversold conditions, and zero-line crossovers as momentum triggers. Divergence between CCI and price is a key reversal signal.
Example
Crude oil's daily CCI drops to −130. On the next bar it crosses back above −100 with a bullish engulfing candle. Short-term traders treat the cross as a buy signal, targeting a return to the zero line.
Related Terms
Detrended Price Oscillator
Removes the long-term trend from price to expose shorter cycles; useful for timing cyclical highs and lows in range-bound conditions.
AdvancedRelative Strength Index (RSI)
Momentum oscillator (0–100) that flags overbought conditions above 70 and oversold below 30 over a default 14-period lookback.
BeginnerStochastic Oscillator
Momentum oscillator comparing a closing price to its high-low range over 14 periods; values above 80 are overbought, below 20 oversold.
BeginnerUltimate Oscillator
Momentum oscillator that averages buying pressure across 7-, 14-, and 28-period timeframes to reduce false signals from a single period.
IntermediateWilliams %R
Inverted Stochastic oscillator (0 to −100) identifying overbought (above −20) and oversold (below −80) conditions over a 14-period window.
Beginner