How does a Commodity Channel Index work?

Hi Brian, thanks for being here.

The Commodity Channel Index (CCI) refers to an oscillator used to determine the current price level in relation to an average price level for a particular time period. The index is considered relatively high when prices are much higher than their average, and relatively low when prices are much lower than their average. This way, CCI is used to determine overbought and oversold levels. 

The CCI value that’s above zero indicates the price is above the historic average, while the CCI value lower than zero suggests that the price is below the historic average.

High CCI value of 100 or move tell us that the price is far above the historic average, and similarly, low readings under -100 indicate a price that’s below the historic average.