What is the Commodity Channel Index (CCI)?

What is the Commodity Channel Index (CCI): A chart indicator/oscillator used in the technical analysis of financial markets. Its primary purpose is to track market momentum, trend strength, and overbought/oversold conditions.

Category: Technical analysis indicator

How is the Commodity Channel Index (CCI) Used: The Commodity Channel Index (CCI) is an oscillator that measures the difference between the current price and the historical average price. In this way, it measures the current market momentum. When the CCI reading is above the zero line, it is an indication that the price of the underlying is above the historic average. Likewise, when the CCI reading is below the zero line, it is an indication that the price of the underlying is below the historic average. CCI is typically used to determine market momentum, trend changes, and appropriate trade entry/exit levels.

What Does the Commodity Channel Index (CCI) Consist of: The Commodity Channel Index (CCI) is presented as a line that is unbounded, with fluctuations above and below a zero line. Historical CCI levels are used to determine if a market may currently be overbought, oversold, or neutral. The indicator is usually placed either above or below the price chart.

What Does the Commodity Channel Index (CCI) Look Like:

Chart of the Commodity Channel Index (CCI)
Chart of the Commodity Channel Index (CCI) – Source: TheTechnicals.com and TradingView

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