Hi, traders!
Today we'll speak about one of the most pretty instrument of divergence detection.
The Chaikin oscillator is named for its creator Marc Chaikin.1
The oscillator measures the accumulation-distribution line of moving average convergence-divergence (MACD). To calculate the Chaikin oscillator, subtract a 10-day exponential moving average (EMA) of the accumulation-distribution line from a 3-day EMA of the accumulation-distribution line. This measures momentum predicted by oscillations around the accumulation-distribution line.
The purpose of the Chaikin oscillator is to identify underlying momentum during fluctuations in accumulation-distribution. Specifically, it applies the MACD indicator to accumulation-distribution rather than closing prices.
For example, a trader wants to determine whether a coin price is more likely to go up or to fall and MACD is trending higher. The Chaikin oscillator generates a bullish divergence when it crosses above a baseline. The baseline is called the accumulation-distribution line. A cross above that line indicates that traders are accumulating, which is typically bullish.
The Chaikin oscillator utilizes two primary buy and sell signals. First, a positive divergence is confirmed with a center-line crossover above the accumulation-distribution line, signaling a potential buying opportunity. Second, a negative divergence is confirmed with a center-line crossover below the accumulation-distribution line, signaling a potential selling opportunity.
A positive divergence signals a coin price is likely to rise, given the increase in accumulation. A negative divergence signals a coin price is likely to fall, given the increase in distribution.
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
Today we'll speak about one of the most pretty instrument of divergence detection.
The Chaikin oscillator is named for its creator Marc Chaikin.1
The oscillator measures the accumulation-distribution line of moving average convergence-divergence (MACD). To calculate the Chaikin oscillator, subtract a 10-day exponential moving average (EMA) of the accumulation-distribution line from a 3-day EMA of the accumulation-distribution line. This measures momentum predicted by oscillations around the accumulation-distribution line.
The purpose of the Chaikin oscillator is to identify underlying momentum during fluctuations in accumulation-distribution. Specifically, it applies the MACD indicator to accumulation-distribution rather than closing prices.
For example, a trader wants to determine whether a coin price is more likely to go up or to fall and MACD is trending higher. The Chaikin oscillator generates a bullish divergence when it crosses above a baseline. The baseline is called the accumulation-distribution line. A cross above that line indicates that traders are accumulating, which is typically bullish.
The Chaikin oscillator utilizes two primary buy and sell signals. First, a positive divergence is confirmed with a center-line crossover above the accumulation-distribution line, signaling a potential buying opportunity. Second, a negative divergence is confirmed with a center-line crossover below the accumulation-distribution line, signaling a potential selling opportunity.
A positive divergence signals a coin price is likely to rise, given the increase in accumulation. A negative divergence signals a coin price is likely to fall, given the increase in distribution.
DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.
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