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