Commodity Channel Index (20)
The Commodity Channel Index (20) is a momentum oscillators indicator used in Skyrexio Strategy Builder for momentum analysis and overbought/oversold identification.
Introduction
The Commodity Channel Index (20) is a cyclical momentum oscillator that provides neutral directional bias for both LONG and SHORT opportunities. It measures the variation of prices from their statistical mean, with values above +100 indicating strong upward movement and below -100 indicating strong downward movement.
How Commodity Channel Index Works
The Commodity Channel Index (CCI) was developed by Donald Lambert to identify cyclical trends. Calculation: CCI = (Typical Price - SMA) / (0.015 Γ Mean Deviation). Despite its name, CCI is highly effective for trading due to its unbounded nature.
β’ Momentum identification - CCI > +100 indicates strong bullish momentum, CCI < -100 indicates strong bearish momentum β’ Overbought/Oversold conditions - Extreme CCI values (>+200 or <-200) suggest potential reversals β’ Cycle analysis - CCI helps identify accumulation and distribution phases β’ Breakout confirmation - CCI breaking above +100 confirms breakouts β’ Unbounded oscillator - Can capture extreme moves without upper/lower limits
Key Characteristics
Category
Momentum Oscillators
Type
Cyclical Momentum Signal
Primary Use
Momentum strength and cycle identification
Timeframe
All timeframes supported (1m to 1M)
Confirmation
Volume, trend context, price action
Strategy Applications
π’ LONG STRATEGY (Cyclical Momentum Acceleration)
CCI is neutral - use CCI > +100 for LONG entries when cyclical momentum indicates strong upward acceleration beyond normal range.
Base Entry Order (LONG)
Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 100
Additional Entry Orders (LONG)
Additional Entry 1: Momentum acceleration confirmation
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: 150
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
OR
Additional Entry 2: Zero line momentum confirmation
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: 0
AND
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Exponential Moving Average (50)
Timeframe: 1H
Take Profit Orders (LONG)
Rule 1: Exit condition - Extreme cyclical peak
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 200
OR
Rule 2: Exit condition - Momentum deceleration
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 100
AND
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Less Than
Second Condition: Commodity Channel Index (20)
Timeframe: 1H
Offset: 1
OR
Rule 3: Exit condition - Volume momentum exhaustion
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
AND
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 150
Stop Loss Orders (LONG)
Rule 1: Stop loss - Momentum breakdown
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 0
OR
Rule 2: Stop loss - Cyclical reversal with volume
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -50
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
OR
Rule 3: Stop loss - Trend breakdown confirmation
First Condition: Close Price
Timeframe: 1H
Operator: Cross Below
Second Condition: Exponential Moving Average (50)
Timeframe: 1H
π΄ SHORT STRATEGY (Cyclical Momentum Deceleration)
CCI is neutral - use CCI < -100 for SHORT entries when cyclical momentum indicates strong downward acceleration beyond normal range.
Base Entry Order (SHORT)
Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -100
Additional Entry Orders (SHORT)
Additional Entry 1: Momentum acceleration confirmation
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: -150
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
OR
Additional Entry 2: Zero line momentum confirmation
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 0
AND
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Exponential Moving Average (50)
Timeframe: 1H
Take Profit Orders (SHORT)
Rule 1: Exit condition - Extreme cyclical trough
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -200
OR
Rule 2: Exit condition - Momentum deceleration
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: -100
AND
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Greater Than
Second Condition: Commodity Channel Index (20)
Timeframe: 1H
Offset: 1
OR
Rule 3: Exit condition - Volume momentum exhaustion
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
AND
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: -150
Stop Loss Orders (SHORT)
Rule 1: Stop loss - Momentum reversal
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Cross Above
Second Condition: Value
Value: 0
OR
Rule 2: Stop loss - Cyclical reversal with volume
First Condition: Commodity Channel Index (20)
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 50
AND
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H
OR
Rule 3: Stop loss - Trend reversal confirmation
First Condition: Close Price
Timeframe: 1H
Operator: Cross Above
Second Condition: Exponential Moving Average (50)
Timeframe: 1H
Advanced Strategy Combinations
CCI Divergence Strategy
Cyclical Divergence Detection:
Price: Makes new high/low
CCI: Fails to make new high/low
Volume: Declining participation confirms divergence
Confirmation: CCI crosses +100/-100 in opposite direction
Extreme CCI Strategy
Multi-Timeframe CCI Analysis
Risk Management Guidelines
Position Sizing
LONG Strategy
Standard
CCI > +100 with volume confirmation
SHORT Strategy
Standard
CCI < -100 with volume confirmation
Extreme Levels
Reduced (75%)
CCI > +200 or < -200
Divergence Plays
Increased
Clear cyclical divergence patterns
CCI Reliability Factors
β Clear momentum threshold breaks (+100/-100) β Volume expansion supports CCI signals β Extreme levels (>+200/<-200) with retreat β Multi-timeframe cyclical alignment β Divergence patterns with confirmation
Best Practices
For LONG Strategies
Momentum threshold - Wait for CCI > +100 before considering entries
Volume confirmation - Ensure volume supports momentum acceleration
Extreme levels - Use CCI > +200 for potential reversal signals
Zero line context - CCI crossing above 0 confirms bullish bias
For SHORT Strategies
Momentum threshold - Wait for CCI < -100 before considering entries
Volume confirmation - Ensure volume supports momentum deceleration
Extreme levels - Use CCI < -200 for potential reversal signals
Zero line context - CCI crossing below 0 confirms bearish bias
Common Mistakes to Avoid
Range trading - Entering when CCI is between -100 and +100
Extreme chasing - Entering at extreme levels without confirmation
Volume ignored - Missing volume validation of momentum shifts
Trend fighting - Trading against strong trends without confirmation
Market Conditions Analysis
Uptrend
π’ High (momentum acceleration)
π΄ Low (against trend)
Downtrend
π΄ Low (against trend)
π’ High (momentum deceleration)
Ranging
π‘ Medium (extreme reversals)
π‘ Medium (extreme reversals)
High Volatility
π’ High (captures extremes)
π’ High (captures extremes)
Low Volume
π΄ Low (wait for confirmation)
π΄ Low (wait for confirmation)
Related Indicators
Conclusion
Key Takeaways
PRIMARY USE: Momentum acceleration identification through +100/-100 thresholds
SECONDARY USE: Extreme level reversal signals and cyclical analysis
ALWAYS: Confirm momentum threshold breaks with volume and trend context
NEVER: Trade CCI signals between -100 and +100 without additional confirmation
Success with CCI requires understanding its unbounded nature and using the +100/-100 levels as momentum thresholds rather than absolute overbought/oversold levels. The key is waiting for clear momentum acceleration with proper volume confirmation.
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