Many commodities exhibit some type of cyclical or seasonal price pattern.
But, the commodity trader still faces the problem of detecting when the regular price movements begin and end because climate and other real world conditions may affect their timing. The CCI doesn't calculate cycle lengths you must determine them yourself or rely on an advisory service but is a timing tool that works best with seasonal or cyclical contracts. To be useful in cyclical markets, an index must examine current prices in the light of past prices but must not allow data from the distant past to confuse present patterns. For this reason, the CCI uses a moving average rather than an exponentially smoothed average as a benchmark against which to measure current prices. The comparison of current prices to moving averages solves one problem by providing a moving reference point.