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# Commodity Channel Index

## Description

The Commodity Channel Index​ (CCI) is a momentum based technical indicator first time introduced by Donald Lambert in 1980, the most often user case is an identifying market cycles, reaching a condition of being overbought or oversold. From technical perspective CCI measures the change in an instrument's price relative to a pre-defined moving average (MA) of the price divided by 1.5% of a normal deviation (D) from that average.

![](/files/-Lvqvo4BB2-HFNCE8d6E)

## Formula

CCI = (Price - MA)/0.015\*STD

Where:\
**Price** - current close price\
**MA** - selected N-period moving average\
**STD** - Standart deviation of price

## Most useful cases

* **Indication of overbought/oversold levels -**   The most useful case of the commodity channel index is an identifying of price reversals, an instrument would be deemed oversold when the CCI dips below −100 and overbought when it exceeds +100. From oversold levels, a buy signal might be given when the CCI moves back above −100. From overbought levels, a sell signal might be given when the CCI moved back below +100.

![](/files/-Lvqvo4DUSWNkZ7wFyob)

* **Divergence/Convergence** - Divergence/Convergence pattern is a form of price action when new high(low) of the price not confirmed with a new high/low of  CCI. Such price and indicator’s behavior can be interpreted as the weakness of current existing trend.

![](/files/-Lvqvo4F1FgyQm1Q1ovC)