Commodity Channel Index - CCI

AAA

DEFINITION of 'Commodity Channel Index - CCI'

An oscillator used in technical analysis to help determine when an investment vehicle has been overbought and oversold. The Commodity Channel Index, first developed by Donald Lambert, quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average. It is computed with the following formula:

Commodity Channel Index (CCI)

BREAKING DOWN 'Commodity Channel Index - CCI'

The CCI has seen substantial growth in popularity amongst technical investors; today's traders often use the indicator to determine cyclical trends in not only commodities, but also equities and currencies.

The CCI, when used in conjunction with other oscillators, can be a valuable tool to identify potential peaks and valleys in the asset's price, and thus provide investors with reasonable evidence to estimate changes in the direction of price movement of the asset.

RELATED TERMS
  1. Indicator

    Indicators are statistics used to measure current conditions ...
  2. Relative Strength Index - RSI

    A technical momentum indicator that compares the magnitude of ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Mechanical Investing

    Buying and selling stocks according to a screen based on predetermined ...
  5. Trend Analysis

    An aspect of technical analysis that tries to predict the future ...
  6. Channel

    1. The system of intermediaries between the producers, suppliers, ...
Related Articles
  1. Charts & Patterns

    Channeling: Charting A Path To Success

    Find out how to build these charts showing buy, sell, stop-loss and take-profit points, and even estimate length of trade.
  2. Forex Education

    "Do The Right Thing" For Trade Breakouts

    Often in life, the right action is the hardest to take. Discover how to get on the right side of a trend.
  3. Active Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  4. Forex Education

    Anticipate Trends To Find Profits

    Monitoring your trades in real-time can help you anticipate their outcomes.
  5. Active Trading

    Timing Trades With The Commodity Channel Index

    We introduce how to use this oscillator, which identifies cyclical trends, for determining buy and sell points.
  6. Chart Advisor

    3 Ways to Trade the Rising Volatility

    With volatility increasing in the markets, many are turning to these three volatility-capturing exchange-traded products.
  7. Chart Advisor

    Big Double Top Patterns On the Verge of Breaking

    These stocks have created big double top chart patterns, and are on the verge of breaking the patterns to the downside--a bearish signal.
  8. Term

    What are Mutually Exclusive Events?

    In statistics, mutually exclusive situations involve the occurrence of one event that does not influence or cause another event.
  9. Mutual Funds & ETFs

    ETF Analysis: PowerShares DB Commodity Tracking

    Find out about the PowerShares DB Commodity Tracking ETF, and explore a detailed analysis of the fund that tracks 14 distinct commodities using futures contracts.
  10. Mutual Funds & ETFs

    ETF Analysis: PowerShares FTSE RAFI US 1000

    Find out about the PowerShares FTSE RAFI U.S. 1000 ETF, and explore detailed analysis of the fund that invests in undervalued stocks.
RELATED FAQS
  1. What are the best ways to measure if a stock is overbought?

    Establishing the overbought status of a given security can be an important aspect of pinpointing potential trend reversals. ... Read Full Answer >>
  2. How do I use The Dual Commodity Channel Index (DCCI) for creating a forex trading ...

    The dual commodity channel index (DCCI) was originally created for use in commodity futures trading. Its use has since been ... Read Full Answer >>
  3. What are the best technical indicators to complement the Dual Commodity Channel Index ...

    The best technical indicators that complement the dual commodity channel index (DCCI) are trendlines, moving averages and ... Read Full Answer >>
  4. What are common strategies traders implement when using the Commodity Channel Index ...

    The commodity channel index (CCI) is designed to identify long-term trend changes, indicate market momentum, and indicate ... Read Full Answer >>
  5. Why is it important to track the Commodity Channel Index - CCI?

    Donald Lambert first introduced the commodity channel index (CCI) in 1980. The CCI has become an important indicator of cyclical ... Read Full Answer >>
  6. How do I use Commodity Channel Index (CCI) when creating a forex trading strategy?

    There are a number of ways to use the Commodity Channel Index, or CCI, as either the basis of, or an element of, a forex ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  2. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  3. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  4. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  5. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  6. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!