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Commodity Channel Index

CCI · module 17 of 33 · momentum

How far the typical price sits from its moving average, in units of mean deviation.

Commodity Channel Index on a chart
EUR/USD · 1h · demo data
Breaks +100Breaks −100Breaks +100Breaks −100Breaks +100Breaks +1001.09051.0791CCI (20)+1000−100
  • CCI
  • ▲/▼ where the rule triggers

CCI measures distance from the average price. Breaks beyond ±100 often mark the start of a strong push.

How to apply it

  1. 1. Add it. Start with 20 on 15m, levels ±100 (Intraday).
  2. 2. Read the market first. Sustained readings beyond +100 indicate genuine strength, not an automatic sell.
  3. 3. Adjust for ranges. Moves back inside ±100 from an extreme at a confirmed boundary are the reversion use.
  4. 4. Manage the trade. Place the stop at 1.5 × ATR and the target at 3.5 × ATR, and only act when the chart above shows the trigger.

How it is calculated

CCI = (TP − SMA(TP, n)) ÷ (0.015 × mean deviation), where TP = (H + L + C) ÷ 3.

Inputs

  • · Period (20)
  • · Levels (±100)

Reading it correctly

In a trend

Sustained readings beyond +100 indicate genuine strength, not an automatic sell.

In a range

Moves back inside ±100 from an extreme at a confirmed boundary are the reversion use.

Settings by style

StyleSuggested values
Intraday20 on 15m, levels ±100
Swing20 on 4h, levels ±100

These are conventional starting points, not optimised values. Test any change on your own pair and timeframe before relying on it.

Worked example

TP = 1.0890, SMA(TP,20) = 1.0870, mean deviation = 0.0010: CCI = 0.0020 ÷ (0.015 × 0.0010) = 133. Price is stretched above its mean — a strength reading in a trend, a possible fade only in a confirmed range.

When it failed

In a trending USD/CAD market, CCI(20) exceeded +100 and stayed above it for 60 candles. Traders selling each new reading above +100 faced six consecutive losses.

Limitations

  • Unbounded, so extremes have no ceiling and cannot be compared across regimes.
  • The 0.015 constant is arbitrary, chosen to put most readings inside ±100.
  • Highly correlated with RSI and Stochastic.

Works well alongside

  • · ADX / DMI
  • · ATR
  • · Market structure

Redundant with

  • · RSI
  • · Stochastic
  • · Williams %R

Stacking these produces agreement by construction, which is not confirmation.

Practice exercise

On 4h GBP/USD, record 15 CCI readings above +100. Split by ADX above or below 25 and compare the 20-candle forward move.

Check your understanding

1. CCI uses typical price, which is:
  • · The close
  • ✓ (High + Low + Close) ÷ 3
  • · (Open + Close) ÷ 2
  • · VWAP

Typical price averages the high, low and close of each candle.

2. CCI differs from RSI in that it is:
  • · Bounded 0–100
  • ✓ Unbounded
  • · Volume-based
  • · Always smoothed three times

CCI has no fixed limits, so readings can extend far beyond ±100 in strong moves.