Commodity Channel Index (CCI)

Scroll down
to see more

Definition:

The CCI (Commodity Channel Index) was developed by Donald Lambert in 1980. Originally designed for commodity futures analysis, it is now widely used for financial instruments such as stocks and indices. This indicator measures the deviation strength of market prices and potential reversal opportunities by comparing the current price with its statistical mean.

Technical Characteristics and Applications:

• CCI is an unbounded oscillator, typically fluctuating between ±100.
• CCI > +100: Indicates a significant deviation of the price from its mean, potentially entering an overbought zone.
• CCI < −100: The price is significantly below its mean, possibly indicating an oversold condition.
• Divergence analysis offers predictive capabilities, suitable for identifying trend reversals.
• It can also be used for trend following; CCI consistently above +100 is considered a strong market trend.