{"id":3123,"date":"2020-03-12T15:41:10","date_gmt":"2020-03-12T12:41:10","guid":{"rendered":"https:\/\/roboforex.com/blog\/?p=3123"},"modified":"2026-05-26T10:53:09","modified_gmt":"2026-05-26T07:53:09","slug":"getting-acquainted-with-cci-indicator","status":"publish","type":"post","link":"https:\/\/roboforex.com/blog\/blog\/2020\/03\/12\/getting-acquainted-with-cci-indicator\/","title":{"rendered":"Getting Acquainted with CCI Indicator"},"content":{"rendered":"\n

In this review, we will discuss an interesting technical indicator<\/a> CCI (Commodity Channel Index). This indicator helps to find an approaching correction or reversal on the price chart.<\/p>\n\n\n\n

<\/span>What is CCI indicator needed for?<\/span><\/h2>\n\n\n\n

The CCI<\/strong> (Commodity Channel Index<\/strong>) indicator was invented in 1980 by a trader Donald Lambert<\/strong>. The author meant his indicator for commodity markets, however, it may successfully be used on other financial markets<\/a>, such as currency, stock, etc.<\/p>\n\n\n\n

The CCI indicator measures the value and the amplitude of price deviations from average values. Large CCI values mean that the price is much higher than average and small values indicate that it has fallen significantly. In essence, CCI may be attributed to the group of classic oscillators<\/a>.<\/p>\n\n\n\n

The indicator helps to understand in what condition the financial instrument currently is: overbought or oversold<\/a>. CCI measures the distance between the price and a set Moving Average<\/a> - this is just another way to say that the indicator measures the deviation of the price from its average values.<\/p>\n\n\n\n

The CCI indicator is situated in a separate window under the price chart and consists of the main line (CCI) and two areas - oversold and overbought. The indicator values vary from -300% to +300%. At the levels of -100% and +100% signal lines are drawn, setting the oversold (from -100% and below) and overbought (from +100% and higher) areas; the central spine of the indicator is 0%.<\/p>\n\n\n\n

\"The<\/a>
The CCI (Commodity Channel Index) indicator<\/figcaption><\/figure>\n\n\n\n

<\/span>CCI indicator calculation formula and settings<\/span><\/h2>\n\n\n\n

The CCI indicator is built in most popular trading terminals. It is represented in a separate window under the price chart. In popular platforms MetaTrader 4<\/a> and MetaTrader 5<\/a>, CCI is added to the price chart via the Main Menu: Insert - Indicators<\/a> - User - CCI.<\/p>\n\n\n\n

For CCI calculation, you must first find the so-called \"typical price\". For this, you add up the high, low, and closing price of each candlestick and divide the sum by 3:<\/p>\n\n\n\n

TP = (HIGH + LOW +CLOSE) \/ 3<\/strong><\/p>\n\n\n\n

Then, you calculate the n-period Simple MA of the TP:<\/p>\n\n\n\n

SMA (TP, n) = SUM (TP, n) \/ n<\/strong><\/p>\n\n\n\n

Then you subtract the SMA (TP, n) from the TPs of all preceding n periods:<\/p>\n\n\n\n

D = TP – SMA (TP, n)<\/strong><\/p>\n\n\n\n

Then you calculate the n-period SMA of absolute D values:<\/p>\n\n\n\n

SMA (D, n) = SUM (D, n) \/ n<\/strong><\/p>\n\n\n\n

Then a coefficient of 0.015 is used: Donald Lambert meant it for scaling so that most of the CCI values could lie between -100% and +100%:<\/p>\n\n\n\n

M = SMA (D, n) * 0,015<\/strong><\/p>\n\n\n\n

Finally, we divide D by M and get the CCI value:<\/p>\n\n\n\n

CCI = D \/ M = TP – SMA (TP, n) \/ 0,015 * SMA (D, n)<\/strong><\/p>\n\n\n\n

In the formulae:<\/p>\n\n\n\n