Commodity Channel Index (CCI)

The Commodity Channel Index (CCI), first introduced by Donald Lambert, is an oscillator used to help determine when a stock has been overbought and oversold.  The Commodity Channel Index usually trends between +/-100.

Commodity Channel Index

The Commodity Channel Index (CCI), first introduced by Donald Lambert, is an oscillator used to help determine when a stock has been overbought and oversold.  The Commodity Channel Index usually trends between +/-100.


Commodity Channel Index Calculation

The CCI measures the variances in the price of a given equity compared to the average price of the same equity.

Commodity Channel Index Interpretation

A divergence occurs when the stock price reaches a new high but the Commodity Channel Index does not (reach a new high).  The CCI is considered to be in an Overbought state when it is above 100 and an Oversold state when it is below -100.  Buy signals can therefore be issued when the CCI rises above the -100 line and sell signals when the CCI drops below the +100 line. 

Buy signals are issued when the CCI rises above the -100 line and sell signals when the CCI drops below the +100 line.

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