# Commodity Channel Index

## Description <a href="#description" id="description"></a>

&#x20;The Commodity Channel Index​ (CCI) is a momentum based technical indicator first time introduced by Donald Lambert in 1980, the most often user case is an identifying market cycles, reaching a condition of being overbought or oversold. From technical perspective CCI measures the change in an instrument's price relative to a pre-defined moving average (MA) of the price divided by 1.5% of a normal deviation (D) from that average.

![](https://33591944-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-MYWZsVZVKQjfWwZjJmj%2F-MZNQlmuWSVixjeSFxYL%2F-MZNQpv_yKrD24e4dsjk%2FAnalytic%20panels%20-%20Chart%20-Technical%20indicators%20-%20Oscillators%20-%20Commodity%20channel%20index.png?alt=media\&token=6607a9de-cb50-488d-958a-3a3a70226606)

## Formula <a href="#formula" id="formula"></a>

CCI = (Price - MA)/0.015\*STD

Where:\
**Price** - current close price\
**MA** - selected N-period moving average\
**STD** - Standart deviation of price

## Most useful cases <a href="#most-useful-cases" id="most-useful-cases"></a>

* **Indication of overbought/oversold levels -** The most useful case of the commodity channel index is an identifying of price reversals, an instrument would be deemed oversold when the CCI dips below −100 and overbought when it exceeds +100. From oversold levels, a buy signal might be given when the CCI moves back above −100. From overbought levels, a sell signal might be given when the CCI moved back below +100.

![](https://gblobscdn.gitbook.com/assets%2F-LD6FsRvQ3jgwJIg6O7r%2F-LEoF9mFKMnqwLt6MZfx%2F-LEoMSVOcUjMEdcc6GD3%2Fimage.png?alt=media\&token=2592e1b0-56b0-4a8b-80a5-d323c0d07287)

* **Divergence/Convergence** - Divergence/Convergence pattern is a form of price action when new high(low) of the price not confirmed with a new high/low of CCI. Such price and indicator’s behavior can be interpreted as the weakness of current existing trend.

![](https://gblobscdn.gitbook.com/assets%2F-LD6FsRvQ3jgwJIg6O7r%2F-LEoF9mFKMnqwLt6MZfx%2F-LEoMjnNNnrctHbCMrJd%2Fimage.png?alt=media\&token=392c55c4-fbb4-406a-b351-cb741c9ad182)

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