Commodity Channel Index (CCI)

CCI, from Donald Lambert, measures the distance of the typical price from its recent average, in units of mean deviation. It is unbounded. Readings beyond +100 or -100 are outside the range Lambert expected most of the time. They mean price is extended relative to its own recent typical prices, not that a commodity channel exists on the chart.

A rise through +100 says typical price has become unusually high versus the window. In a trend that can persist. In a range it often snaps back. The zero line is the average itself. Crosses of zero are a coarser trend read than the 100 levels.

A turn up from below -100, back toward zero, is the mean-reversion long. A hold above +100 is the trend-strength long. Decide which strategy you are trading. Using both on the same signal is how the rules contradict each other.

A turn down from above +100 is the mean-reversion short. A hold below -100 is a strong decline. Do not buy -100 in a market that is walking lower every bar.

Assuming +100 is a universal overbought law. The constant 0.015 was chosen to make 100 a convenient fence, not because markets reverse there.

Mean deviation uses the same window you are judging. After a crash the window is the crash, and CCI normalises it away. Pair the number with the actual distance from a level.