Momentum oscillator

CCICommodity Channel Index

CCI (Commodity Channel Index) measures the deviation of price from its statistical mean. Despite the name, it works on any market. Readings above +100 suggest a new uptrend; below -100, a new downtrend.

20 candles
Default period
Typically -200 to +200 (unbounded)
Range
> +100 / < -100
Signal levels
Divergence + new-trend identification
Best use

What is CCI?

The Commodity Channel Index was developed by Donald Lambert in 1980, originally for commodity markets but it works on any liquid market. CCI is technically unbounded โ€” values can extend beyond +200 or -200 during strong trends โ€” but most readings sit between -100 and +100 in normal conditions.

Lambert designed CCI to identify the start of new trends. A move from below -100 to above -100 signals a potential new uptrend; a move from above +100 to below +100 signals a potential new downtrend. This is mechanically different from RSI's divergence focus.

Category
Momentum oscillator
Default settings
20 candles
Signal range
Typically -200 to +200 (unbounded)
Introduced by
Donald Lambert, 1980

How CCI works

Calculation:

Typical Price = (High + Low + Close) / 3 CCI = (Typical Price - 20-period SMA of TP) / (0.015 * Mean Absolute Deviation)

The constant 0.015 was chosen by Lambert to make ~70-80% of values fall between -100 and +100 in normal market conditions. Values beyond those bounds are statistically unusual and worth attention.

The 20-period default is Lambert's original. Some traders use shorter periods (10) for faster signals, longer periods (40-50) for swing-trade context.

How to use CCI

Two practical uses.

1. Trend initiation: A clean cross from below -100 to above -100 (with a few-bar confirmation) often marks the start of a sustained uptrend. Same logic inverted for downtrends. Lambert designed CCI specifically for this signal.

2. Divergence at extreme readings: When CCI reads +200 or more and starts to diverge from price (price still rising, CCI falling), the trend is losing momentum. Same inverted pattern for oversold extremes.

CCI works on any market โ€” despite the name, commodities are not its sole use case. Forex, equities, and crypto all respond to CCI signals when applied with proper context (regime, structure, confluence).

Want more practical context? Look up unfamiliar terms in the forex glossary, or see how indicators stack on real charts in the trading blog.

CCI FAQ

Does CCI only work on commodities?
No. Despite the name, CCI works on any liquid market โ€” forex, equities, crypto, futures. Lambert originally targeted commodities but the math is universal.
What does CCI above +100 mean?
Lambert's threshold for "unusual" upward deviation. Above +100 historically only happens during strong directional moves. A cross from below -100 to above -100 is the new-trend signal.
What are the standard CCI settings?
20-period lookback. This is Lambert's original from 1980 and remains widely used. Shorter periods (10) react faster; longer (40-50) are smoother.
How does CCI differ from RSI?
Both measure momentum. RSI is bounded 0-100 and built around average gains vs losses. CCI is technically unbounded and measures deviation from a moving mean. CCI catches new trends earlier than RSI; RSI is more reliable for divergence in established trends.
Can I use CCI alongside other oscillators?
Yes, carefully. CCI complements RSI by catching different signals (new trends vs divergence). Stacking three oscillators rarely adds confirmation; it usually just adds noise. CCI + RSI is a reasonable pair.

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