The Commodity Channel Index (CCI), developed by Donald Lambert in 1980, compares the current mean price
with the average mean price over a period of time. Approximately 70 to 80 percent of CCI values are
between −100 and +100, which makes it an oscillator. Values above +100 imply an overbought condition,
while values below −100 imply an oversold condition.
According to
Investopia.com, traders often buy when the CCI dips below -100 and then rallies back above -100 to sell the security
when it moves above +100 and then drops back below +100.
Interpretation: -100 and below: Indicates an oversold condition or the start of a strong downtrend. +100
and above: Indicates an overbought condition or the start of a strong uptrend. Values near 0 often signal
a lack of clear momentum.
Note: Traders often combine CCI with other indicators to confirm trends or signals, as using it alone can
lead to false signals. It’s particularly useful in volatile markets or when identifying shorter-term
trading opportunities.
Commodity Channel Index (CCI) Type: Momentum
The Commodity Channel Index (CCI), developed by Donald Lambert in 1980, compares the current mean price with the average mean price over a period of time. Approximately 70 to 80 percent of CCI values are between −100 and +100, which makes it an oscillator. Values above +100 imply an overbought condition, while values below −100 imply an oversold condition.
According to Investopia.com, traders often buy when the CCI dips below -100 and then rallies back above -100 to sell the security when it moves above +100 and then drops back below +100.
Interpretation: -100 and below: Indicates an oversold condition or the start of a strong downtrend. +100 and above: Indicates an overbought condition or the start of a strong uptrend. Values near 0 often signal a lack of clear momentum.
Note: Traders often combine CCI with other indicators to confirm trends or signals, as using it alone can lead to false signals. It’s particularly useful in volatile markets or when identifying shorter-term trading opportunities.
See
https://en.wikipedia.org/wiki/Commodity_channel_index