An oscillator that measures how far the current price has strayed from its recent statistical mean. Built for commodity cycles, now used across every market.
The CCI (Commodity Channel Index) was published by Donald Lambert in 1980. Originally designed to capture the cyclical rhythms of commodity markets, it now appears on equities, currencies, and indices alike.
CCI quantifies how far the current typical price has drifted from its average over a recent window. Where RSI and Stochastic are pinned to a 0–100 scale, CCI has no fixed ceiling or floor. A reading beyond ±100 signals that the market has stepped outside its statistically usual range — that price is, in some meaningful sense, no longer behaving like itself.
Formula
Typical Price (TP) = (High + Low + Close) ÷ 3
CCI = (TP − n-period SMA of TP) ÷ (0.015 × n-period mean deviation)
Mean Deviation = average of ｜TP − SMA｜ over n periods Standard parameter: n = 20
In other words, ±100 is not an absolute "overheated" threshold. It is the statistical line that says: the market has stepped outside its usual range.
How to Read
OANDA:USDJPY
What makes CCI peculiar is that the same threshold supports opposing interpretations, depending on regime.
| Approach | Cross above +100 | Cross below −100 |
|---|---|---|
| Trend-following | Start of a strong move, buy | Start of a strong decline, sell |
| Contrarian | Overheated, look to fade | Capitulation, look to buy the dip |
Lambert himself favoured the trend-following reading — treating ±100 as the moment an unusual move begins. The contrarian reading came later, through practice.
If price prints a higher high while CCI prints a lower high (bearish divergence), or price prints a lower low while CCI prints a higher low (bullish divergence), the same logic that applies to RSI applies here.
| Period | Character |
|---|---|
| 14 | Short-term; noisy |
| 20 | Lambert's standard; well balanced |
| 50 | Longer-term; fewer signals, higher conviction |
Related Studies
RSI (Relative Strength Index)
An oscillator that quantifies overbought and oversold conditions. A go-to indicator for objectively measuring market momentum.
Stochastic Oscillator
Where does today's close sit inside the recent range? The Stochastic Oscillator returns that position as a 0–100 number, then reads momentum shifts through the %K / %D pair.