The Commodity Channel Index (CCI) is a technical indicator that measures the deviation of the price from its moving average. This indicator was developed around 30 years ago and is based on the cyclical nature of market movements.
Price movement patterns can help predict trends. The CCI indicator is most commonly calculated using timeframes of 20 and 60 days for the moving average.
The values of the CCI indicator range between +100 and -100. A high CCI indicator value indicates an overbought market, while a low value suggests an oversold market.
Trading signals from the CCI indicator are often based on divergences and high-value zones.
FAQ
What is the Commodity Channel Index (CCI)?
The Commodity Channel Index (CCI) is a technical indicator used to measure the deviation of price from its moving average, helping traders identify overbought and oversold market conditions.
How is the CCI calculated?
The CCI is typically calculated using timeframes of 20 or 60 days, measuring the difference between the current price and the moving average, adjusted by the mean absolute deviation.
What do CCI values indicate?
CCI values above +100 suggest an overbought market, while values below -100 indicate an oversold market. Traders use these levels to spot potential trend reversals.
