CCI indicator (Commodity Channel Index): formula, +100/−100 levels and settings
What is the CCI indicator?
The CCI indicator, or Commodity Channel Index, measures how far price has moved away from its recent average, scaled by how much it normally varies. Donald Lambert introduced it in 1980 for commodity cycles, but today it is used on indices, stocks and futures, including NIFTY and BANKNIFTY.
Unlike the stochastic or RSI, CCI is not bounded between 0 and 100. It oscillates around zero and can go to +250 or −300 in strong moves. Lambert chose the 0.015 constant so that roughly 70 to 80 percent of readings fall between +100 and −100.
CCI = (TP − SMA of TP over N) ÷ (0.015 × Mean Deviation of TP over N) (default N = 20)
How the CCI formula works
1. Typical price
Each candle's typical price is the average of high, low and close.
2. Average and mean deviation
Take a 20-period simple average of typical price. Then compute the mean deviation: the average absolute distance of each typical price from that average.
3. Scale it
CCI = (current TP − average TP) ÷ (0.015 × mean deviation).
Illustration
The 20-period average TP is 24,150 and mean deviation is 20 points. The current TP is 24,190. CCI = (24,190 − 24,150) ÷ (0.015 × 20) = 40 ÷ 0.3 ≈ 133. Price is unusually high compared with its recent behaviour.
How to read CCI: +100, −100 and zero
- Above +100: price is well above its average. Lambert originally read this as the start of strong upward momentum, not as an automatic reversal.
- Below −100: price is well below its average, strong downward momentum.
- Between −100 and +100: normal range, no strong push.
- Zero line: price at its average. Crosses of zero show momentum shifting sides.
Two schools of reading exist. Trend traders treat a move above +100 as momentum to follow. Range traders treat readings above +200 or below −200 as stretched. Both can be right depending on whether the market is trending; ADX helps decide which.
CCI divergence
Price makes a higher high but CCI a lower high: momentum is fading. The mirror at lows is a bullish divergence. As always, divergence is a warning, not a trigger.
Best CCI settings for NIFTY intraday
| Setting | Use |
|---|---|
| CCI 20 | Lambert's default; balanced on 5- and 15-minute |
| CCI 14 | Faster; popular for intraday NIFTY/BANKNIFTY |
| CCI 50 | Slow trend filter; above zero = up bias |
Some traders combine two: a CCI 50 to define bias and a CCI 14 to time pullbacks. On 1-minute charts CCI swings so much that it is hard to read.
CCI strategy ideas (educational)
1. Zero-line trend filter
A slow CCI (50) above zero suggests an up bias; below zero, a down bias. Use it to decide which side to study.
2. Pullback in trend
In an up-bias market, a faster CCI dipping below −100 and turning back above it marks a pullback that may be ending. Combine with a level such as VWAP or a Fibonacci retracement.
3. Momentum breakout
When CCI pushes from below 0 to above +100 as price breaks out of a range, momentum confirms the breakout. Check volume to separate a breakout from a fakeout.
Strong vs weak CCI readings
Because CCI is unbounded, extreme readings are relative. On a quiet day, +120 may be the session's extreme; on an expiry or news day, +280 may be normal. Compare the reading with how CCI has behaved over the last few sessions.
A strong reading agrees with structure: CCI above +100 while price breaks a swing high with expanding volume. A weak reading appears against the trend, in the lunch hour, or on thin volume. Mean deviation also shrinks in quiet periods, so small moves can produce big CCI numbers when the market has been very still.
Combining CCI with volume and footprint
CCI is built only from price. When it shows a stretched reading at a level, the footprint chart can show whether aggressive buyers are still active or are being absorbed. A CCI divergence at a high while cumulative delta flattens is a more complete picture of fading demand than either alone.
Volume profile adds location: a +200 CCI reading straight into a high volume node or the prior day's value area high is a different situation from the same reading in open air.
Worked BANKNIFTY example (illustration)
Illustration with plausible numbers. BANKNIFTY on a 5-minute chart trades between 51,600 and 51,750 for the first hour. CCI(20) oscillates between −80 and +90. At 10:35 a candle closes at 51,790, above the range, and CCI jumps to +165 with the session's highest volume.
A momentum trader would read this as a move out of balance. At 11:20 price pulls back to 51,760, CCI drops to −40, then turns up. Later, price pushes to 51,950 but CCI peaks at +120, below its earlier +165: a bearish divergence near the high. Trading F&O carries a high risk of loss; this is an illustration of how readings evolve, not a trade record.
Common CCI mistakes
- Treating +100 as "overbought" in every market; in trends it often marks strength.
- Comparing CCI values across instruments.
- Ignoring the unbounded scale and expecting fixed extremes.
- Acting on CCI on 1-minute charts where it is very noisy.
- Not combining it with any level or volume context.
CCI around the open and expiry
The first 20 candles of the day on a 5-minute chart include the previous afternoon in the CCI calculation, so an opening gap can push CCI to an extreme reading straight away. Many traders let the first 15 to 30 minutes settle before giving CCI much weight. Weekly expiry sessions can also produce sharp, short-lived stretches as option hedging flows hit the index, so extreme readings on those days deserve extra caution. Sizing positions with clear risk rules matters more than any single reading.
Seeing it on the TradingMarble chart
On the TradingMarble chart you can add CCI in a lower pane with your chosen period and compare it with footprint delta and volume profile on the same screen. This makes it easier to study whether a stretched reading came with real participation. See features.
CCI checklist
- Is the market trending or ranging?
- Is CCI above +100, below −100 or in between?
- Which side of zero is the slower CCI on?
- Is there a divergence at a meaningful level?
- Does volume or delta agree?
The Commodity Channel Index is a flexible momentum tool once you remember it is unbounded and context-dependent.
Frequently asked questions
What does CCI above 100 mean?
CCI above +100 means the typical price is well above its recent average relative to normal variation. Lambert originally read it as the start of strong upward momentum. In a range it can mean price is stretched, so the meaning depends on whether the market is trending.
What is the best CCI setting for intraday?
The default 20-period CCI is balanced on 5-minute and 15-minute charts. Many intraday NIFTY and BANKNIFTY traders use 14 for faster reaction, and some add a 50-period CCI as a slow trend filter.
Is CCI better than RSI?
They measure momentum differently. RSI compares average gains with losses and stays between 0 and 100. CCI measures distance from a moving average scaled by mean deviation and is unbounded. CCI reacts more to sudden stretches, while RSI is steadier. Neither is universally better.
Why is CCI not limited to 0-100?
CCI divides distance from the average by mean deviation, so a very large move relative to normal variation produces a large reading. There is no upper or lower cap. The 0.015 constant only makes most readings fall between +100 and −100.
What is CCI divergence?
CCI divergence occurs when price makes a new high or low but CCI does not. A higher price high with a lower CCI high is bearish divergence; a lower price low with a higher CCI low is bullish divergence. It signals fading momentum, not a certain reversal.
What is typical price in CCI?
Typical price is (high + low + close) ÷ 3 for each candle. CCI uses it instead of only the close so the indicator reflects the whole candle's range as well as where it closed.