Description

• Commodity Channel Index was introduced by Donald Lambert
• It is built on belief that commodities or stocks or bonds move in cycles, with highs and lows coming at periodic intervals
• It is a momentum oscillator can be used to identify overbought and oversold levels
• It can also be used to show beginning & ending of trends as oscillates above and below 0 level

Interpretation

• Readings below -100 imply an oversold condition
• Readings above +100 imply an overbought condition
• CCI crossing 0 level triggers change in trends
• A shorter CCI will be more volatile with a smaller percentage of values between +100 and -100. The more periods used to calculate the CCI, the higher the percentage of values between +100 and -100

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• Bars

Returns/Output

Commodity Channel Index value of the stock at that point of time

Formula

CCI = (TP - SMATP) / (.015 X Mean Deviation)
where,
TP = Typical Price
SMATP = Simple Moving Average of Typical Price