Chaikins Money Flow Analysis & Money Flow Trading Signals
Developed by Marc Chaikins
This indicator functions as an oscillator, measuring the inflow and outflow of capital - the rate of money accumulation or distribution - in the gold market.
The technical indicator is based on the fact that the nearer the close price is to the high of the price, the more the accumulation of gold.
Also the nearer the close price is to the low of the price, the more the distribution of gold.
Chaikin's Money Flow remains positive if prices consistently close above their bar's midpoint while volume continues to rise.
But, if the market price stays below the middle of the bar while volume goes up, the technical indicator will show a negative trend.
XAU/USD Analysis and How to Generate Signals
Buy Trade Signal
When it goes above zero, it means gold is being gathered. A number over +10 means it's good to buy. Numbers over +20 show a market that's going up a lot.
Buy Trade Signal
Sell Trading Signal
A zero line cross below zero means gold distribution. Below -10 signals a sell. Under -20 shows a strong downtrend.
Sell Signal
Gold Trend Line break with Chaikin’s money Flow
Money flow can be used to confirm breakouts from gold trend lines or support/resistance zones.
If the price breaks through an upward gold trend line, wait for a confirmation signal - look for technical indicators reading below -10.
Gold TrendLine Break - Sell Trading Signal
If the price breaks an downward gold trend line, traders should then wait for a confirmation signal from technical indicator values of above +10.
Gold TrendLine Break - Buy Signal
Divergence Gold Trading
A divergence between an indicator and price often suggests a potential market reversal. However, as with any divergence scenario, it's crucial to wait for additional confirmation signals before proceeding with a divergence-based trade setup.
A bullish divergence signal occurs when the asset's price establishes a lower low, while the Chaikin Money Flow indicator registers a higher low.
Bearish divergence forms with price at new highs. Yet Chaikins Money Flow shows lower peaks.
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