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.

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  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 >>

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