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. DUAL Commodity Channel Index - ...

    A method used in technical analysis to identify when an asset ...
  2. Oscillator

    A technical analysis tool that is banded between two extreme ...
  3. Price Zone Oscillator

    The Price Zone Oscillator is a technical indicator that measures ...
  4. Oversold Bounce

    An oversold bounce is a rally in prices that occurs due to the ...
  5. Channel

    1. The system of intermediaries between the producers, suppliers, ...
  6. Williams %R

    In technical analysis, this is a momentum indicator measuring ...
Related Articles
  1. Investing

    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

    "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. Financial Advisor

    Relative Strength Index (RSI)

    Learn more about this technical momentum indicator that determines whether an asset is overbought or oversold.
  4. Trading

    An Introduction To Oscillators

    Find out how this indicator may help improve the average investor's entry and exit points.
  5. Investing

    Does the S&P Follow the Consumer Confidence Index?

    Are the ups and downs of the Consumer Confidence Index similar to those of the S&P 500?
  6. Investing

    What Does Oversold Mean?

    The term oversold has several applications for an asset’s price.
  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.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What is a common strategy traders implement when using the Dual Commodity Channel ...

    See how traders and analysts use the DUAL Commodity Channel Index to spot divergences, breakouts and instances when the security ... Read Answer >>
  4. How do you know where on the oscillator you should make a purchase or sale?

    Learn more about oscillator indicators, technical momentum measures that are used by traders to predict potential market ... Read Answer >>
  5. What precisely is a stochastic oscillator meant to predict?

    Gain a basic understanding of the stochastic oscillator and how this technical indicator is designed to predict reversals ... Read Answer >>
  6. What are the best technical indicators to complement the Dual Commodity Channel Index ...

    Understand the dual commodity channel index and how it is used by traders and analysts in conjunction with other technical ... Read Answer >>
Hot Definitions
  1. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
  2. Interest Rate Swap

    An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for ...
  3. Custodian

    A financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. ...
  4. Supply Chain

    The network created amongst different companies producing, handling and/or distributing a specific product. Specifically, ...
  5. In The Money

    1. For a call option, when the option's strike price is below the market price of the underlying asset. 2. For a put option, ...
  6. Cross Culture

    The interaction of people from different backgrounds in the business world. Cross culture is a vital issue in international ...
Trading Center