The Commodity Channel Index (CCI) is a very popular indicator that gives easy to use buy and sell signals; the CCI also is used to identify overbought and oversold areas of price action. The CCI is calculated so that roughly 75% of price movement should be between +100 (overbought) and -100 (oversold).

An example of how to use the CCI for buy and sell signals is given below in the chart of the E-mini S&P 500 Futures contract:

Commodity Channel Index Buy Signal

1. Commodity Channel Index (CCI) is below oversold line (-100).
2. CCI then crosses above the oversold line.

Commodity Channel Index Sell Signal

1. Commodity Channel Index (CCI) is above overbought line (+100).
2. CCI then crosses below the overbought line.