Commodity Channel Index
Commodity Channel Index (CCI)
Commodity Channel Index Technical Indicator (CCI)
measures the deviation of the commodity price from its average
statistical price. High values of the index point out that the price is
unusually high being compared with the average one, and low values show
that the price is too low. In spite of its name, the Commodity Channel
Index can be applied for any financial instrument, and not only for the
There are two basic techniques of using Commodity Channel Index:
Finding the divergences
The divergence appears when the
price reaches a new maximum, and Commodity Channel Index can not grow
above the previous maximums. This classical divergence is normally
followed by the price correction.
As an indicator of overbuying/overselling
Channel Index usually varies in the range of ±100. Values above +100
inform about overbuying state (and about a probability of correcting
decay), and the values below 100 inform about the overselling state
(and about a probability of correcting increase).
To find a Typical Price. You need to add the HIGH, the LOW, and the CLOSE prices of each bar and then divide the result by 3.
TP = (HIGH + LOW +CLOSE)/3
To calculate the n-period Simple Moving Average of typical prices.
SMA(TP, N) = SUM[TP, N]/N
To subtract the received SMA(TP, N) from Typical Prices.
D = TP — SMA(TP, N)
To calculate the n-period Simple Moving Average of absolute D values.
SMA(D, N) = SUM[D, N]/N
To multiply the received SMA(D, N) by 0,015.
M = SMA(D, N) * 0,015
To divide M by D
CCI = M/D
SMA — Simple Moving Average;
N — number of periods, used for calculation.
Full MQL4 source of CCI is available in the Code Base: Commodity Channel Index
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