The Commodity Channel Index, also known as ‘CCI’, is a technical analysis tool, created by Donald Lambert to measure the variation of a financial instrument from the statistical mean.
The calculation of the CCI is based on the difference between the price of a financial instrument and its moving average (an average time span of 20 days divided by the mean deviation of the price).
The values usually result in a range between +100 to -100.
Lambert recommended long positions when the oscillator rises above +100 and short positions when it falls below -100.
Some traders use the CCI to identify overbought and oversold conditions when the oscillator value is above +100 and below -100.
This CCI can also be used in combination with other indicators such as ‘Bollinger Bands’ or ‘2 moving averages crossover’.
