Commodity Channel Index - CCI
An oscillator used in technical analysis to help determine when an investment vehicle has been overbought and oversold. The Commodity Channel Index, first developed by Donald Lambert, quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average. It is computed with the following formula:
Investopedia Commentary
The CCI has seen substantial growth in popularity amongst technical investors; today's traders often use the indicator to determine cyclical trends in not only commodities, but also equities and currencies.
The CCI, when used in conjunction with other oscillators, can be a valuable tool to identify potential peaks and valleys in the asset's price, and thus provide investors with reasonable evidence to estimate changes in the direction of price movement of the asset.
Related Links
Timing Trades With The Commodity Channel Index
Introduction To Technical Analysis
Getting to Know Oscillators - Part 1: Introduction
Channeling: Charting A Path To Success
See also: Channel, Horizontal Channel, Indicator, Mechanical Investing, Oscillator, Relative Strength Index - RSI, Technical Analysis, Trend Analysis
Also spelled: Commodity Index, Channel Index, Commodity Channel, Commodity ChannelsCCI