CYCLEPEDIAThe trading encyclopedia
IT

CCI (Commodity Channel Index)

Lambert's CCI measures how many 'typical deviation units' price sits from its own 20-period mean. The ±100 band marks the normal: beyond it, the move is statistically unusual.

On this page

The CCI, published by Donald Lambert in 1980 for commodity markets, measures how far price has strayed from its own recent mean, in units of typical deviation. It is a conceptual relative of Bollinger Bands — both measure deviations from an average — but presented as an oscillator around zero, with no ceiling and no floor.

In plain terms — The CCI is an anomaly meter: zero = price is exactly where its recent history would put it; +100 or −100 = it has pushed to the edges of its usual behaviour; beyond = it is doing something rare by its own standards.

How it is built

Typical price = (high + low + close) / 3 CCI = (typical price − 20-period mean of typical price) / (0.015 × mean deviation)

The 0.015 constant is Lambert's signature: chosen so that 70–80% of values land between −100 and +100. The ±100 band is not a limit — it is the boundary of normal behaviour.

Reading Meaning
CCI ≈ 0 Price on its own typical mean
CCI > +100 Statistically unusual upside deviation
CCI < −100 Statistically unusual downside deviation

How to read the chart — Top: a full rise-and-fall cycle. Bottom: CCI 20 (gold) around zero, with the ±100 thresholds. Interactive — the highlighted points show the excursion above +100 during the rally, the one below −100 in the decline, and the role of the 0.015 constant.

INDICATOR · MOMENTUM CCI — how far price sits from its typical mean Typical price (H+L+C)/3 vs 20-period mean · ±100 normal band CYCLEPEDIA DIAGRAM — EMICICLO PRICE — CONTEXT Price 102 106 109 CCI (20) +100 0 −100 56 +270 -252 PEAK → TROUGH +270 → -252 BARS INSIDE ±100 47% An unbounded oscillator: ±100 is the normal band, not a ceiling
The CCI tracks the typical price's deviation from its mean: excursions beyond ±100 accompany the most directional phases.
Hover or tap the highlighted points

Reading it in practice

Two opposite schools coexist on the CCI, and it pays to know it before reading any guide:

  1. The Lambert school (breakout) — the move above +100 flags the start of a directional phase: you buy strength and exit when it re-enters the band. Consistent with the tool's origin (commodity trends).
  2. The mean-reversion school — in a range, excursions beyond ±100 are excesses due to revert toward the mean: you trade the return.
  3. The two readings use the same number with opposite conclusions: the regime decides which one applies — the same lesson as the RSI overbought, seen from another angle.
  4. Divergences — CCI failing to confirm price's new extremes: the usual rules — a warning, not a timer.

Limits and traps

Warning — The CCI has no scale limits: it can hit +300 and keep going. Treating ±100 as a wall price "must" bounce off means fading every newborn trend — the exact opposite of how Lambert's school used it.

  • With no built-in smoothing, the CCI is choppier than RSI and Stochastic: many traders average it or read it on higher timeframes.
  • The ±100 band is calibrated on the 20-period window: changing the period also changes how often excursions occur.
Suggest an edit My proposals