The Commodity Channel Index, first developed by Donald Lambert, quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average.
The CCI is very popular amongst technical investors; today's traders often use the indicator to determine cyclical trends in not only commodities, but also equities and currencies.
CCI = (Typical Price - 20-period SMA of TP) / (0.015 * Mean Deviation) Typical Price (TP) = (High + Low + Close)/3 Constant = .015
CCI measures the difference between a security's price change and its average price change. High positive readings indicate that prices are well above their average, which is a show of strength. Low negative readings indicate that prices are well below their average, which is a show of weakness. The Commodity Channel Index (CCI) can be used as either a coincident or leading indicator.
Technical chart for CCI