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