The Commodity Channel Index (CCI) was developed by Donald Lambert in 1980. Despite the name, it works very well on NSE stocks and indices. CCI measures the difference between the current typical price and its moving average, divided by the mean absolute deviation — essentially measuring how far price has deviated from its statistical norm.
CCI Formula (Default: 20 period)
Typical Price = (High + Low + Close) ÷ 3
CCI = (Typical Price − SMA(20) of TP) ÷ (0.015 × Mean Absolute Deviation)
Range: Typically between −200 and +200 (but can go beyond)
Reading CCI Values
| CCI Level | Signal | Interpretation |
|---|---|---|
| Above +200 | Extremely overbought | Strong trend or reversal imminent |
| +100 to +200 | Overbought | Bullish trend — hold or partial exit |
| 0 to +100 | Mild bullish | Neutral to bullish |
| −100 to 0 | Mild bearish | Neutral to bearish |
| −100 to −200 | Oversold | Bearish trend — hold short or partial exit |
| Below −200 | Extremely oversold | Strong downtrend or reversal imminent |
CCI Breakout Strategy — Most Popular
Bullish Breakout:
Entry: CCI crosses above +100 from below
Exit: CCI crosses back below +100
Interpretation: Price has broken above its normal range — strong bullish momentum
Bearish Breakout:
Entry: CCI crosses below −100 from above
Exit: CCI crosses back above −100
Entry: CCI crosses above +100 from below
Exit: CCI crosses back below +100
Interpretation: Price has broken above its normal range — strong bullish momentum
Bearish Breakout:
Entry: CCI crosses below −100 from above
Exit: CCI crosses back above −100
CCI Zero-Line Cross Strategy
Buy: CCI crosses above 0 (price above its moving average)
Sell: CCI crosses below 0
Works best on: NIFTY 50 daily chart combined with EMA trend filter
Generates more signals than the +100/−100 breakout strategy
Sell: CCI crosses below 0
Works best on: NIFTY 50 daily chart combined with EMA trend filter
Generates more signals than the +100/−100 breakout strategy
CCI Divergence
Like RSI and MACD, CCI divergence is a powerful reversal signal:
- Bullish: Price makes lower low, CCI makes higher low below −100
- Bearish: Price makes higher high, CCI makes lower high above +100
CCI is particularly effective on weekly NSE charts for identifying major trend changes in Nifty 50 stocks. A CCI crossing above +100 on the weekly chart has historically identified the start of major uptrends in Indian equities.
CCI Settings for NSE
| Period | Best For |
|---|---|
| 20 (default) | Swing trading, daily charts |
| 14 | More sensitive, intraday |
| 40–50 | Positional trading, weekly charts |
