chaikin oscillator
Chaikin oscillator indicator was created by Mark Chaikin.
Chaikin Oscillator is an oscillator indicator that is used to measure the momentum of the accumulation/distribution line of MACD(Moving Average Convergence Divergence).
Since it is based on accumulation/distribution ,can therefore be considered to be on the basis of divergence(that is market price short moving in opposite direction to that of the chaikin oscillator curve)
can also be considered to be on the basis of overbought/oversold market.
Since chaikin oscillator is an oscillator,it therefore has an oscillation at point 0 ranging between -100 to +100.
Chaikin oscillator is based on 3-period and 10-period.
Using the 3-period and 10-period,Chaikin oscillator can therefore be calculated using the following formula;
-By subtracting the 10-period Exponential Moving Average of Accumulation/Distribution indicator from a 3 period exponential moving average of Accumulation/Distribution indicator thus we have;
Chaikin Oscillator =EMA(A/D,3)-EMA(A/D,10)
Since chaikin oscillator is based on divergence,it therefore follows that when the price in the market is moving downwards while the chaikin oscillator curve is moving upwards,then a reversal in the market price will take place thus the market will also start moving upwards in the same direction with the chaikin oscillator curve.On the other hand,if the price in the market is moving upwards while the chaikin oscillator curve is moving downwards,a reversal price in the market will take place thus the price in the market will also start moving downwards in the same direction as with the chaikin curve.
Also ,since chaikin oscillator is an oscillator and it has an oscillation at point 0 ranging between -100 to 100,it can therefore enable a trader to know when to enter a buy or a sell position.When chaikin oscillator curve falls below 0 at below -50,that will be an indication that the market has become oversold thus signaling the trader to close any sell position and enter a buy position since the market will start moving upwards while when the chaikin oscillator curve rises above 0 at above 50,that will be an indication that the market has become an overbought market thus signaling the trader to close any buy position and enter a sell position since the market will start moving downwards.
This is indicated as from the candle sticks chart below;
From the candle sticks chart above,there are 3 points,point A,B and C. Point A represents the chaikin oscillator curve while point B and C represent the downwards and upwards market respectively.
At point C,the market was moving downwards while the chaikin oscillator curve was moving upwards.The market therefore reversed and start moving upwards in the same direction as the chaikin oscillator curve thus an indication of an upward market movement.
At point B,the market was moving upwards while the chaikin oscillator curve was moving downwards.The market therefore reversed and start moving downwards in the same direction as the chaikin oscillator curve thus an indication of a downwards market movement.
Also,for an overbought and oversold market is being indicated from point B and C.
At point C,the chaikin oscillator falls below -50 thus an indication of an oversold in the market thus signaling the trader to close any sell position and enter a buy position since the market was going to start moving upwards from that point.
At point B,the chaikin oscillator rises above 50 thus an indication of an overbought in the market.This signals the trader to close any buy position and enter a sell position since the market was going to start moving downwards from that point
Chaikin Oscillator is an oscillator indicator that is used to measure the momentum of the accumulation/distribution line of MACD(Moving Average Convergence Divergence).
Since it is based on accumulation/distribution ,can therefore be considered to be on the basis of divergence(that is market price short moving in opposite direction to that of the chaikin oscillator curve)
can also be considered to be on the basis of overbought/oversold market.
Since chaikin oscillator is an oscillator,it therefore has an oscillation at point 0 ranging between -100 to +100.
Chaikin oscillator is based on 3-period and 10-period.
Using the 3-period and 10-period,Chaikin oscillator can therefore be calculated using the following formula;
-By subtracting the 10-period Exponential Moving Average of Accumulation/Distribution indicator from a 3 period exponential moving average of Accumulation/Distribution indicator thus we have;
Chaikin Oscillator =EMA(A/D,3)-EMA(A/D,10)
Since chaikin oscillator is based on divergence,it therefore follows that when the price in the market is moving downwards while the chaikin oscillator curve is moving upwards,then a reversal in the market price will take place thus the market will also start moving upwards in the same direction with the chaikin oscillator curve.On the other hand,if the price in the market is moving upwards while the chaikin oscillator curve is moving downwards,a reversal price in the market will take place thus the price in the market will also start moving downwards in the same direction as with the chaikin curve.
Also ,since chaikin oscillator is an oscillator and it has an oscillation at point 0 ranging between -100 to 100,it can therefore enable a trader to know when to enter a buy or a sell position.When chaikin oscillator curve falls below 0 at below -50,that will be an indication that the market has become oversold thus signaling the trader to close any sell position and enter a buy position since the market will start moving upwards while when the chaikin oscillator curve rises above 0 at above 50,that will be an indication that the market has become an overbought market thus signaling the trader to close any buy position and enter a sell position since the market will start moving downwards.
This is indicated as from the candle sticks chart below;
From the candle sticks chart above,there are 3 points,point A,B and C. Point A represents the chaikin oscillator curve while point B and C represent the downwards and upwards market respectively.
At point C,the market was moving downwards while the chaikin oscillator curve was moving upwards.The market therefore reversed and start moving upwards in the same direction as the chaikin oscillator curve thus an indication of an upward market movement.
At point B,the market was moving upwards while the chaikin oscillator curve was moving downwards.The market therefore reversed and start moving downwards in the same direction as the chaikin oscillator curve thus an indication of a downwards market movement.
Also,for an overbought and oversold market is being indicated from point B and C.
At point C,the chaikin oscillator falls below -50 thus an indication of an oversold in the market thus signaling the trader to close any sell position and enter a buy position since the market was going to start moving upwards from that point.
At point B,the chaikin oscillator rises above 50 thus an indication of an overbought in the market.This signals the trader to close any buy position and enter a sell position since the market was going to start moving downwards from that point
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