In this guide to understanding the Commodity Channel Index (CCI), we’ll show you what this chart looks like and how it’s calculated. We’ll also explain its components and teach you how to interpret it.
What Is the Commodity Channel Index (CCI)?
The Commodity Channel Index (CCI) is one of the more popular indicators that attempts to offer buy and sell signals; the CCI also is used to identify overbought and oversold areas of price action.
How Is the CCI Calculated?
The CCI is calculated so that roughly 75% of price movement should be between +100 (overbought) and -100 (oversold).
Example Interpretations of the CCI
An example of how a trader might use the CCI for potential buy and sell signals is given below in the chart of the E-mini S&P 500 Futures contract:
Commodity Channel Index Potential Buy Signal
- Commodity Channel Index (CCI) is below oversold line (-100).
- CCI then crosses above the oversold line.
Commodity Channel Index Potential Sell Signal
- Commodity Channel Index (CCI) is above overbought line (+100).
- CCI then crosses below the overbought line.
The Commodity Channel Index (CCI) attempts to signal overbought and oversold conditions that might be used by a trader to buy and sell.
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Learn more about technical analysis indicators, concepts, and strategies including:
- VIX / VXN Volatility Indexes
- Mass Index
- Herrick Payoff Index
- Directional Movement Index
- Commodity Select Index
- Stochastic RSI
- Swing Index
- Ulcer Index