Commodity Channel Index (CCI)
Oscillator measuring how far price deviates from its statistical mean; above +100 is strong momentum, below −100 suggests oversold.
CCI = (Typical Price − SMA(Typical Price, n)) / (0.015 × Mean Absolute Deviation)
The CCI compares the current typical price ((H + L + C) / 3) to a simple moving average of typical prices, then normalises by the mean absolute deviation. The constant 0.015 scales results so about 70–80 % of values fall within ±100.
Originally designed for commodities to identify cyclical turns, it now sees wide use on any market. Traders use extreme readings (±100 or ±200) to spot overbought/oversold conditions, and zero-line crossovers as momentum triggers. Divergence between CCI and price is a key reversal signal.
On the desk
Crude oil's daily CCI drops to −130. On the next bar it crosses back above −100 with a bullish engulfing candle. Short-term traders treat the cross as a buy signal, targeting a return to the zero line.