Chaikin Oscillator
Type
Volume indicator
Short introduction
Marc Chaikin developed the Chaikin Oscillator based on his Accumulation/Distribution Line.
Statement
The idea of the oscillator and thus is to Accumulation/Distribution Line indicate a trend change in the underlying oscillator, that is, to perform a typical oscillator task. On the Accumulations/Distributions lineŠ± two exponential MAs are calculated, one short and one long. Then the long MA is subtracted from the short MA. The result is an upward and downward open curve, which fluctuates around the zero line.
Formula/calculation
CO = EMAx(AD) - EMAy(AD)
where:
AD: Accumulations/Distributions line
x: Short-term MA
y: Long-term MA
Interpretation
Important for the application of the indicator is the general understanding of the basic indicator, the Accumulations/Distributions line. Please refer to this indicator for more details. For the Chaikin oscillator, there are two different interpretation possibilities, similar to other oscillators.
First, there is the search for divergences: A negative signal is generated when the underlying is still climbing new highs, while the indicator is no longer climbing new highs. A positive signal is generated when the actual price development still establishes new lows, but the indicator no longer establishes them.
On the other hand, there is the possibility to calculate an MA for the indicator and to use the intersection of the two lines as a signal generator. A buy signal is given when the indicator crosses its MA from bottom to top, a sell signal when the indicator crosses its MA from top to bottom.
Default setting
- 3 days for the short MA
- 10 days for the long MA