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Indicator

Commodity Channel Index

Identify momentum strength and exhaustion through statistically adjusted deviation from the mean — not a simple overbought or oversold tool.

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Key Takeaways

CCI measures deviation of price from its moving average, normalised by mean deviation.
Values above plus 100 indicate strong bullish momentum.
Values below minus 100 indicate strong bearish momentum.
Near zero indicates price close to its average.
Used to identify momentum regimes, not to blindly fade extremes.

What It Measures

CCI measures deviation of price from its moving average, normalised by mean deviation.
Values above plus 100 indicate strong bullish momentum.
Values below minus 100 indicate strong bearish momentum.
Near zero indicates price close to its average.

Institutional Use

Used to identify momentum regimes, not to blindly fade extremes.
Sustained readings above plus 100 indicate strong upward regime.
Divergences between CCI and price signal momentum exhaustion.

Key Signals

CCI above plus 100 signals strong bullish momentum and potential trend continuation.
Below minus 100 signals strong bearish momentum.
Divergence means price making higher highs while CCI weakens, signalling fading momentum.

Trading Playbook

Trend continuation: CCI above plus 100 and rising, enter on pullbacks to zero line.
Momentum fade: CCI diverges from price at extremes with structural confirmation.
Exit when CCI crosses back through zero or divergence resolves.

When Not to Trade

Avoid fading CCI extremes in strong trending markets.
Do not use alone without structural context.