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Learn How to use the Commodity Channel Index trading indicator

The Commodity Channel Index (CCI) is an indicator which attempts to distinguish between trending and extreme markets. Even though the name suggests it applies only to commodities, it works on any market, from forex to stocks to commodities. Many indicators which determine trend are called directional indicators, meaning they show whether the market is in an uptrend or a downtrend. This indicator is more of an oscillator, as it measures the current price level relative to the average over a specified period. CCI is high when prices are above the average (overbought), and low when prices are below the average (oversold). The indicator was originally designed to identify long-term trend changes but has been adapted by traders to use on all time frames.

The CCI fluctuates around the zero line, with approximately 75% of the values falling between +100 and -100. About 25% of the values will fall above +100 or below -100, indicating strong trending markets. The longer the period, the more likely the CCI will remain inside the +100 to -100 range. A shorter CCI (10 periods for example) will be more volatile and provide a higher percentage outside of the range.

Learn to use the CCI trading indicator with Chart examples HERE >>>>