Chaikin Oscillator
Introduction
Section titled “Introduction”Chaikin’s Oscillator (CHO) is a technical indicator that measures the difference between moving averages of Accumulation/Distribution.
Theses of the Oscillator
Section titled “Theses of the Oscillator”The oscillator is based on three main theses:
1. Accumulation and Distribution
Section titled “1. Accumulation and Distribution”If a share or index closes higher than it opened, it indicates accumulation. If it closes lower than the average level of the day, it indicates distribution.
2. Volume and Price Growth
Section titled “2. Volume and Price Growth”Stable price growth is accompanied by increased trade volume and strong accumulation. A lag in volume growth suggests insufficient fuel for further rise. A slump in prices is usually accompanied by low volume and panic liquidation of positions.
3. Money Flow Dynamics
Section titled “3. Money Flow Dynamics”The oscillator helps track money resources coming into and leaving the market. Comparing volume and price dynamics can identify market peaks and foundations.
Using the Oscillator
Section titled “Using the Oscillator”To increase reliability, it is recommended to use the oscillator with other technical indicators. The most important signal occurs when prices reach extreme levels and the oscillator fails to surpass its previous extremum.
Alternative Usage
Section titled “Alternative Usage”A change in the oscillator’s direction can be a signal for buying or selling, but only if it aligns with the price trend. For example, in an uptrend, an up-turn of the oscillator above zero can be a signal to buy.
Conclusion
Section titled “Conclusion”Chaikin’s Oscillator is a useful tool for analyzing market trends and identifying potential trade signals. It is recommended to use it in conjunction with other indicators for higher reliability.