What Is CCI (Commodity Channel Index)?
CCI (Commodity Channel Index), developed by Donald Lambert in 1980, was originally designed for commodities but is now used across asset classes. It measures the current price's deviation from a moving average, scaled by a mean deviation factor.
Conventionally, CCI above +100 = price unusually strong (overbought); below -100 = unusually weak (oversold). The +/-100 thresholds are somewhat arbitrary — about 25% of price action stays outside this band by design, so 'overbought' on CCI doesn't mean a top is in.
The practical use is divergence detection and breakout confirmation: when CCI moves above +100 from below, momentum is shifting; the opposite at -100 signals weakness. Like all oscillators, CCI gives false signals in strong trends, where it stays extended for extended periods.
Related terms
- RSI (Relative Strength Index) — A momentum oscillator (0-100) measuring the speed and magnitude of recent price changes.
- Stochastic Oscillator — Momentum indicator measuring where current price sits within its recent high-low range.
- Divergence (Bullish / Bearish) — When price makes a new high or low but a momentum indicator does not — signal of weakening trend.
- MACD (Moving Average Convergence Divergence) — Trend-following momentum indicator showing the difference between two exponential moving averages.