Commodity Channel Index (CCI)

The CCI indicator supplied with NinjaTrader cannot be used with an input series other than price. We have recoded it so that you may apply it to other indicators. To do so, simply select any of the other NinjaTrader indicators as input series.

Commoditiy Channel Index for NinjaTrader 8

Indicator Description

The CCI indicator ( Commodity Channel Index ) was developed by Donald Lambert and is designed to identify cyclical turns in the commodities markets. The idea is that commodities move in cycles, i.e. intervals of high-to-high or low-to-low.

Lambert recommends using a calculation period of 1/3 of the cycle. If a commodity cycle is 60 days, the calculation period is 20 days. You may identify setups when the indicator approach the +100 or -100 regions.

If the CCI indicator moves above +100, it signals that a new uptrend is beginning. Once the Commodity Channel Index falls below +100, the position should then be closed. If the values moves below -100, a new downtrend is beginning. Conversely, once values rise above -100, the position should be closed.

If you see new highs or lows that diverge from the CCI indicator, it could signal a price reversal. Such divergences often signal strong buy or sell signals. Of course, you should use additional technical indicators to confirm.

Finally, the CCI indicator you may apply the Library Roofing Filter to correct distortions in the fixed scale threshold readings. One may then use the threshold levels without manually adjusting according to the current trend scenario. However, if you use the CCI indicator to trade divergences, the Roofing Filter should not be used.

An example on how to apply the Roofing Filter to correct distortions was discussed in our post on Improving Fast Stochastic Setups (with video).

The Commodity Channel Index vs. the RSI

Both the CCI indicator and RSI are momentum oscillators and that can signal bullish and bearish divergences. As mentioned above, if you see that new highs and lows are not accompanied by corresponding momentum levels, it may signal possible trend reversals.

Still, one generally use the RSI to detect overbought vs. oversold, whereas the CCI tracks the normal deviation from an instrument’s average price, using that as a basis locate divergences from the normal trend cycles.

Also, a classic RSI compares the average of up-closes versus the average of down-closes over a 14 bar lookback period. The readings oscillate between 0 and 100, with overbought values above 70, oversold below 30 and a midpoint level of 50. For additional information, please review our RSI indicator from our library, that has an improved output, compared to the standard NinjaTrader version.

Other library indicators

Several standard indicators currently supplied with NinjaTrader cannot be used with an input series other than price. We have therefore recoded these indicators, including the CCI indicator and they are available from our nested indicators category. They include among others the ADX, ADXR, ATR, CCI, Directional Movement, Directional Movement Index, Double Smoothed Stocastics, Fast Stochastics and the Standard Stochastics.

The CCI indicator is best used when aligned with the mid/higher time frame trend bias and Volume / Range Analysis. You may for example review the trend bias using the Donchian ChannelHeikin Ashi Candles, the Regression Channel or the Daily Regression Channel. For Volume / Range Analysis you may have a look at the Force IndexRelative Volume or Relative Ranges. You may also consider combining it with one of the indicators featured in our Spotlight newsletter, for example the Donchian ChannelHeikin Ashi, Opening Range, Regression Channel, Relative VolumeRelative Ranges or the TDI indicator.

The CCI indicator is available for NinjaTrader 8.

Commodity Channel Index (CCI)