Commodity Channel Index (CCI)

The Commodity Channel Index (CCI) is a very popular indicator that gives easy to use buy and sell signals; the CCI also is used to identify overbought and oversold areas of price action. The CCI is calculated so that roughly 75% of price movement should be between +100 (overbought) and -100 (oversold).

An example of how to use the CCI for buy and sell signals is given below in the chart of the E-mini S&P 500 Futures contract:

1. Commodity Channel Index (CCI) is below oversold line (-100).
2. CCI then crosses above the oversold line.

Sell Signal

1. Commodity Channel Index (CCI) is above overbought line (+100).
2. CCI then crosses below the overbought line.

The Commodity Channel Index (CCI) is an ever popular technical analysis tool signaling overbought and oversold conditions that lead to easily interpreted buy and sell signals.