CCI - Commodity Channel Index
Learn CCI indicator for identifying cyclical trends. Understand overbought/oversold levels and divergence trading.
What is CCI?
The Commodity Channel Index (CCI) was developed by Donald Lambert in 1980. Despite its name, it works on any asset, not just commodities.
CCI measures how far current price deviates from its statistical mean, oscillating above and below zero with no upper or lower limit.
CCI = (Typical Price - SMA of TP) / (0.015 × Mean Deviation)
Typical Price = (High + Low + Close) / 3
Typical Price = (High + Low + Close) / 3
How to Interpret
Key Levels
- Above +100: Overbought - price is unusually high
- Below -100: Oversold - price is unusually low
- Zero line: Cross above = bullish, cross below = bearish
Bullish Signals
- CCI crosses above -100 from below
- CCI crosses above zero line
- Bullish divergence with price
Bearish Signals
- CCI crosses below +100 from above
- CCI crosses below zero line
- Bearish divergence with price
GarudaAlgo Implementation
GarudaAlgo Enhancement
GarudaAlgo uses CCI for identifying cyclical turning points and confirms signals with price action patterns at extreme levels.
Settings
- Period: 20 (standard), 14 (faster)
- Overbought: +100
- Oversold: -100
Trading Strategies
Strategy 1: Zero-Line Cross
- Buy when CCI crosses above zero from below
- Sell when CCI crosses below zero from above
- Simple trend-following approach
Strategy 2: Extreme Reversal
- Wait for CCI to exceed +100 or -100
- Look for reversal back across the extreme level
- Confirm with candlestick pattern
- Trade the mean reversion