The commodity channel index (CCI) was developed by Donald Lambert and was first featured in the Commodities magazine in 1980. Lambert originally developed the CCI to identify cyclical turns in commodities but the indicator can be successfully applied to forex ,indices and stocks .
In general CCI measures the current price level relative to the average price level over a given period of time .CCI is relatively high when prices are far above their average . CCI is relatively low when prices are far below their average .
Commodity Channel Index (CCI) is a very versatile indicator that can be used to identify a new trend or warn of extreme conditions .
A robust trading system can be built using the Commodity Channel Index (CCI) indicator . CCI can also be used as a leading indicator ,which means that CCI can indicate a change of trend even before the price trend change actually takes place .
To understand the Commodity Channel Index (CCI) a few terms need to be defined which will be used as we go into the details of this indicator .
Commodity Channel Index (CCI) is an indicator which measures the current price level relative to the average price level over a gi…