Oscillators
Chaikin Oscillator
Shows whether money is flowing into or out of a market, by comparing short- and long-term trends of the Accumulation/Distribution line.
The idea in plain words
The Accumulation/Distribution line adds volume on days when the price closes near its high and subtracts it when it closes near its low. The Chaikin Oscillator is the momentum of that line, much as MACD is the momentum of the price.
How it is calculated
The difference between a 3-period and a 10-period exponential average of the A/D line.
Chaikin = EMA(A/D, 3) − EMA(A/D, 10)How to use it
- Crossing above zero: buying pressure is growing. Below zero: selling pressure is growing.
- Divergence: price making new highs while the oscillator makes lower highs is a warning.
Drawing conclusions
- Use with the price trend: signals in the trend's direction are more reliable.
Example
A stock drifts sideways while the Chaikin Oscillator rises above zero for two weeks: buyers are quietly accumulating; a breakout follows.
Prices in examples are illustrative.
Watch out for
- On currencies and CFDs, "volume" is tick volume (the number of price changes), a rough proxy for activity.
A little history
Marc Chaikin developed both the A/D line and this oscillator.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.