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Commodity Channel IndexCCI

The Commodity Channel Index (CCI) measures how far the price is from its recent average relative to its typical deviation; despite the name, it is used on any market.

The Commodity Channel Index measures how far price has moved from its recent average, scaled by how much it normally deviates. Despite its name, traders use it on stocks, currencies and indices as well as commodities.

Category
Indicators and Tools
Reading time
3 min
Also called
CCI oscillator
Updated

CCI in plain words

Donald Lambert introduced the CCI in 1980, in an article for Commodities magazine.1

He chose the 0.015 constant so that most readings — roughly 70–80% — land between −100 and +100.1

Readings far outside that band show unusual strength or weakness.

How CCI is calculated

  1. Typical price

    Typical Price (TP) = (High + Low + Close)/3.1

  2. Average it

    Take a 20-period simple moving average of typical price.1

  3. Mean deviation

    Find the mean deviation: take each period's distance from the 20-period average typical price, ignore the sign, and average those distances.1

  4. Apply the formula

    Compute CCI as (typical price − its 20-period average) ÷ (0.015 × mean deviation).1

  5. Read ±100

    A surge above +100 can signal the start of an uptrend.1

  6. Confirm

    Confirm CCI signals with a trend tool or another method before acting.2

Worked examples

Example 1 — Calculation

Strong

A hypothetical stock has TP 105, SMA of TP 100 and mean deviation 2.

Example 1 — Calculation — calculation
TP − SMA5
.015 × MD0.03
CCI≈167

Plugging into the ChartSchool formula gives about 167.1

Example 2 — Breakout signal

Bullish

A hypothetical index’s CCI moves from 60 to 130.

Example 2 — Breakout signal — calculation
CCI130

A jump above +100 shows unusually strong buying and can mark the start of an uptrend.1

Example 3 — Extreme reading

Not yet extreme

A hypothetical volatile stock’s CCI hits +180 and keeps rising.

Example 3 — Extreme reading — calculation
CCI+180

CCI is an unbound oscillator, so an overbought call is subjective; ±200 is more representative of a true extreme.1

CCI vs RSI

AspectCCIRSI
BoundsUnbounded0–100
InputTypical priceClosing price
Key levels±100, ±20070 and 30
OriginLambert, 1980Wilder, 1978

Where CCI is used

Advantages and disadvantages

Advantages

  • Works on any market.
  • Flags both trends and extremes.
  • Adjustable period.
  • Clear reference levels.

Disadvantages

  • Unbounded, so extremes are subjective.
  • Zero-line crosses whipsaw.
  • Divergences can mislead in strong trends.
  • Needs confirmation.

Going deeper

Read as far as you need. Each level builds on the one before it.

Design

Beginner

The .015 constant puts roughly 70 to 80 percent of values between -100 and +100.1

Whipsaws

Intermediate

Trading every zero-line cross produces lots of false signals, so many traders wait for ±100 instead.1

Divergence limits

Advanced

In strong trends, divergences can fail repeatedly, so wait for price or another indicator to agree.2

Common mistakes

  1. Selling every +100

    Above +100 can signal strength, not a top.

  2. Using fixed extremes everywhere

    Volatile markets need wider bands.

  3. Trading zero crosses alone

    Expect whipsaws.

  4. Ignoring the trend

    Divergences fail in strong trends.

Check your understanding

Test yourself before moving on. Each answer comes with an explanation.

Q1TP 52, SMA 50, mean deviation 1. CCI?
Q2Why is CCI called unbound?

Key points to remember

  1. CCI compares price with its average and deviation.
  2. Most values fall between −100 and +100.
  3. It is unbounded.
  4. It works on any market.
  5. Confirm signals with other tools.

Frequently asked questions

Is CCI only for commodities?

No; it is used on any market.

What period is standard?

20 periods is common.

Is +100 overbought?

Not necessarily; it can mark a new trend.

Further learning

Sources

This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.

  1. StockCharts ChartSchool. Commodity Channel Index (CCI) (opens in a new tab) Checked .
  2. Fidelity. Commodity Channel Index (CCI) (opens in a new tab) Checked .

Read more elsewhere

Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.