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