Commodity Channel Index - CCI

What is the '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. Oscillator

    A technical analysis tool that is banded between two extreme ...
  2. DUAL Commodity Channel Index - ...

    A method used in technical analysis to identify when an asset ...
  3. Overbought

    1. A situation in which the demand for a certain asset unjustifiably ...
  4. Oversold

    1. A condition in which the price of an underlying asset has ...
  5. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used ...
  6. Oversold Bounce

    An oversold bounce is a rally in prices that occurs due to the ...
Related Articles
  1. 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.
  2. Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  3. ETFs & Mutual Funds

    How Traders Can Utilize CCI (Commodity Channel Index) To Trade Stock Trends

    Use the Commodity Channel Index (CCI) to enter and exit price trends.
  4. Trading

    "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.
  5. Managing Wealth

    The Top Technical Indicators For Commodities Investing

    Traders can use "the usual suspects" (standard indicators for trend trading) when it comes to choosing indicators for investing in commodities. Here's how.
  6. Markets

    Use The Percentage Price Oscillator: The "Elegant Indicator" For Picking Stocks

    Technical analysis is basically an attempt to disprove the credo that "Past performance is not indicative of future results." The percentage price oscillator, which measures momentum, is among ...
  7. Trading

    Overbought Or Oversold? Using The RSI To Find Out

    The Relative Strength Index is a technical indicator that measures the velocity and magnitude of changes in a stock’s price.
  8. Trading

    Exploring Oscillators and Indicators: Conclusion

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com The goal of every short-term trader is to determine the direction of a given asset's momentum and to attempt to profit from ...
  9. Trading

    Commodities: The Portfolio Hedge

    These diverse asset classes can provide downside protection and upside potential. Find out how to use them.
  10. Trading

    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.
RELATED FAQS
  1. Why is it important to track the Commodity Channel Index - CCI?

    Learn more about the commodity channel index, a technical momentum oscillator that traders can use to track overbought and ... Read Answer >>
  2. What are the differences between Relative Strength Index (RSI) & Commodity Channel ...

    Read about some of the primary differences between the relative strength index (RSI) and the commodity channel index (CCI). Read Answer >>
  3. How do investors and traders use the Commodity Channel Index - CCI?

    Learn about some of the most basic trading strategies generated through the commodity channel index, a technical momentum ... Read Answer >>
  4. What are common strategies traders implement when using the Commodity Channel Index ...

    Use the commodity channel index to identify good, low-risk trading opportunities, and look at a variety of CCI technical ... Read Answer >>
  5. How do I use Commodity Channel Index (CCI) when creating a forex trading strategy?

    Learn that forex traders can use the Commodity Channel Index to create a forex trading strategy or as an additional indicator ... Read Answer >>
  6. What is the Dual Commodity Channel Index (DCCI) formula and how is it calculated?

    Learn how to calculate Doug Lambert's commodity channel index (CCI) along with its derivative indicator, the dual commodity ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center