What is CCI?
A versatile indicator that measures the current price level relative to an average price level over a given period.
Think of it like this
Like measuring how far a runner has strayed from the average pace - too far ahead or behind may signal a return to normal.
Formula
CCI = (Typical Price - SMA of TP) ÷ (0.015 × Mean Deviation)- Typical Price: (High + Low + Close) ÷ 3
- SMA of TP: Simple moving average of typical price
- Mean Deviation: Average absolute deviation from SMA
Why it matters
- Identifies cyclical turns in commodities and stocks
- Measures price deviation from statistical mean
- Works on any timeframe
- Good for identifying new trends
What's a good value?
> +100
Overbought
Strong uptrend or overextended
0 to +100
Bullish
Positive momentum
-100 to 0
Bearish
Negative momentum
< -100
Oversold
Strong downtrend or overextended
Real-world example
CCI crossing above +100 from below suggests a new uptrend may be starting.
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