CCI measures how far the current typical price is from its moving average, normalized by the average absolute deviation. Despite the name it works on any market, not just commodities.

Formula

typical    = (high + low + close) / 3
sma_tp     = SMA(typical, period)
mean_dev   = mean(|typical - sma_tp|, period)
cci        = (typical - sma_tp) / (0.015 * mean_dev)

The 0.015 constant is calibrated so roughly 70-80% of CCI readings fall within ±100.

Params

period - window for the SMA and mean deviation. Default 20.

Output

Single column named after your indicator (e.g. cci).

Common thresholds

Range	Meaning
> +100	Strong momentum / overbought
< -100	Strong momentum down / oversold
-100 to +100	Normal range

Some traders use ±200 as extreme thresholds for the strongest breakouts.

Usage

Breakout entries when CCI crosses above +100.
Mean reversion fades on CCI > +200 or < -200.
Zero-line cross as a momentum direction flip.

Pitfalls

CCI is unbounded - extreme readings during news events can dwarf normal thresholds and stay extreme for many bars. Don't use CCI as the only filter for a high-volatility regime.