Chaikin Money Flow Energies Technical Analysis & Money Flow Trading Signals
Developed by Marc Chaikins
This an oscillator which measure the Accumulation/distribution of money that is flowing into and out of a energies.
The indicator is based on the fact that the nearer the closing price is to the high of the price, the more the accumulation of the energies.
Also the nearer the closing price is to the low of the price, the more the distribution of the energies.
Chaikin Money Flow will be positive if price consistently closes above the bar's midpoint with increasing volume.
However, if price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.
Technical Analysis & Generating Trade Signals
Buy Trade Signal
A crossover of above zero signifies accumulation of a energies. A value of above +10 is a buy/bullish signal. Values above +20 signify a strong upward trending market.
Buy Trading Signal
Sell Trading Signal
A Zero line cross of below zero signifies distribution of a energies. A value of below -10 is a short/sell signal. Values below -20 signify a strong downward trending market.
Sell Trading Signal
Trend Line break with Chaikin's money Flow
The money flow can be used to confirm trend line breaks or support/resistance level breaks.
If price breaks an upward trend line, traders should then wait for a confirmation signal from the indicator values of below -10.
Trendline Break
If price breaks an downward trend line, traders should then wait for a confirmation signal from indicator values of above +10.
Trendline Break
Divergence Energies
A divergence between this indicator & energies price often signals a pending reversal in market direction. However as with all divergences its best to wait for confirmation signals before trading the divergence.
A bullish divergence signal occurs when the price makes lower low while the Chaikin's Money Flow makes a higher low.
A bearish divergence trading signal forms when price makes a higher high while the Chaikins Money Flow technical indicator makes lower high.
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