Commodity Channel Index (CCI)
Original schematic showing the guide's principal visual relationships.
CCI = (Typical Price − SMA of Typical Price)/(0.015 × mean deviation).
Formula and components
An unbounded oscillator measuring how far typical price sits from its moving average.
CCI = (Typical Price − SMA of Typical Price)/(0.015 × mean deviation).
How it works
The indicator transforms price, range, or volume observations over a selected lookback. Shorter settings react faster but create more noise; longer settings respond more slowly and emphasize the underlying regime. Always compare the reading with price structure and timeframe.
How to read it
Moves above +100 or below −100 identify unusually strong deviations; centerline crosses and divergence add trend context.
Practical example
CCI above +100 indicates price is well above its recent statistical mean, while a move back toward zero shows normalization. Strong trends can keep CCI extreme, so threshold crossings need price and trend context.
Confirmation checklist
Compare the current reading with its centerline, thresholds, prior swing, and price action. Crossovers and divergences are context clues, not standalone entries.
Limitations and false signals
CCI is unbounded, so fixed thresholds behave differently across securities and volatility regimes.
Limitations and false signals
Frequently asked questions
What does this pattern or indicator describe?
An unbounded oscillator measuring how far typical price sits from its moving average.
How should the signal be confirmed?
Moves above +100 or below −100 identify unusually strong deviations; centerline crosses and divergence add trend context. Compare the current reading with its centerline, thresholds, prior swing, and price action. Crossovers and divergences are context clues, not standalone entries.
What can cause a false signal?
CCI is unbounded, so fixed thresholds behave differently across securities and volatility regimes.