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Glossary · Indicators

CCI (Commodity Channel Index)

An oscillator measuring how far the typical price is from its average, in units of mean deviation; ±100 marks unusually strong deviations.

By Sky Trade editorial teamUpdated

The Commodity Channel Index, created by Donald Lambert, compares the typical price — (high + low + close) ÷ 3 — with its moving average and divides the difference by the mean absolute deviation multiplied by a constant, 0.015. The constant was chosen so that most readings fall between −100 and +100. Despite the name, CCI is used on every kind of market.

Unlike RSI or Stochastic, CCI has no fixed bounds. Readings beyond ±100 are treated as strong deviations, and some traders watch ±200 as extreme.

Two opposite schools of interpretation exist:

  • Mean reversion: fade extremes in ranges, expecting a return towards the average.
  • Momentum: treat a move above +100 as the start of strength, not its end.

The conflict between them is the main lesson: the same reading means different things in a range and in a trend. Pair CCI with a regime filter rather than using the thresholds blindly. Zero-line crosses and divergences are other common signals.

CCI sits in the Sky Trade terminal's oscillator group. See CCI explained and the oscillator entry.

Example

Typical price is 1.2660, its 20-period average 1.2645 and the mean deviation 0.0008: CCI = (1.2660 − 1.2645) ÷ (0.015 × 0.0008) = 125, a strong upward deviation.

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