Commodity Channel Index - CCI

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. Trend Analysis

    An aspect of technical analysis that tries to predict the future ...
  3. Oscillator

    A technical analysis tool that is banded between two extreme ...
  4. Mechanical Investing

    Buying and selling stocks according to a screen based on predetermined ...
  5. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
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. Trading Strategies

    Mastering Short-Term Trading

    The proper application of a few different tools can help a short-term trader succeed.
  7. Investing Basics

    How You Make Money In Real Estate

    No matter what anyone tells you, the basic ways that money is made through real estate haven’t changed in centuries.
  8. Investing Basics

    Free Cash Flow Yield: A Fundamental Indicator

    Free cash flow can measure a business’s performance as if you’re looking at its net income line.
  9. Technical Indicators

    Four Commonly Used Indicators In Trend Trading

    No single indicator can punch a ticket to market riches, but here are four that remain popular among trend traders.
  10. Active Trading Fundamentals

    4 Stocks With Bullish Head and Shoulders Patterns for 2016 (PG, ETR)

    Discover analyses of the top four stocks with bullish head and shoulders patterns forming in 2016, and learn the prices at which they should be considered.
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 >>
Hot Definitions
  1. Short Selling

    Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is ...
  2. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  3. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  4. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  5. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  6. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center