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Section: 3 Market Structure
Sub Section: 3 Chaikin Oscillator
The Chaikin Oscillator indicator is the difference between a 3-day exponential moving average and a 10-day exponential moving average applied to the Accumulation Distribution. Using the Chaikin Oscillator it is possible to monitor volume flow for a market. The Chaikin Oscillator should be used together with the price envelope.
The Chaikin Oscillator is good for adding momentum to the Accumulation/Distribution Line, but can sometimes add a little too much momentum and be difficult to interpret. The moving averages are both relatively short and will therefore be more sensitive to changes in the Accumulation/Distribution Line.
There are two bullish signals that can be generated from the Chaikin Oscillator: positive divergences and centerline crossovers. In direct contrast to the bullish signals, there are two bearish signals that can be generated from the Chaikin Oscillator: a negative divergence and a bearish centerline crossover.