CCI — Commodity Channel Index
Overview
CCI measures the difference between the current price and its statistical average, identifying cyclical turns and momentum extremes. Originally designed for commodities, CCI is now widely used across crypto, forex, and stock markets with equal effectiveness. Combine CCI divergence with trend-following strategies for higher-probability entries. Check out our indicators hub for complementary momentum tools like the RSI and MACD.
How It Works
CCI = (Typical Price − SMA of Typical Price) / (0.015 × Mean Deviation). The 0.015 constant ensures roughly 70-80% of readings fall between −100 and +100. Default period is 20.
Key Signals
- CCI above +100 = strong bullish momentum (potential overbought in ranges).
- CCI below −100 = strong bearish momentum (potential oversold in ranges).
- CCI crossing zero from below = bullish shift; from above = bearish shift.
- CCI divergence from price signals potential reversals.
Common Mistakes
- Using fixed overbought/oversold levels — CCI is unbounded, so ±200 or ±300 is possible in trends.
- Applying CCI without trend context — in strong trends, treat +100 as a continuation signal.
- Using CCI on very short periods — it becomes extremely noisy below 14 periods.
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