Chaikin Money Flow Trading Analysis & Money Flow Trading Signals

Developed by Marc Chaikins

This an oscillator which measure the Accumulation/distribution of money that is flowing into and out of gold.

The indicator is based on the fact that the nearer the closing trading price is to the high of the trading price, the more the accumulation of gold.

Also the nearer the closing trading price is to the low of the trading 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 trading price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.

Gold Analysis & How to Generate Signals

Buy 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 Trading Signal

Sell Signal

A Zero line cross of below zero signifies distribution of gold. A value of below -10 is a short/sell signal. Values below -20 signify a strong downward trending market.

Sell Trade 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 level breaks-out.

If trading price breaks an upward gold trend line, Gold traders should then wait for a confirmation signal from the indicator values of below -10.

Gold Trend Line Break - Sell Trading Signal

If trading price breaks an downward gold trend line, Gold traders should then wait for a confirmation signal from indicator values of above +10.

Gold Trend Line Break - Buy Trading Signal

Divergence Gold Trading

A divergence between this indicator & 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 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.