Chaikins Money Flow Commodity Trading Technical 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 commodity.
The indicator is based on the fact that the nearer the closing commodity price is to the high of the commodity price, the more the accumulation of commodity.
Also the nearer the closing commodity price is to the low of the commodity price, the more the distribution of commodity.
Chaikins Money Flow will be positive if commodity price consistently closes above the bar's midpoint with increasing volume.
However, if commodity price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.
Commodity Trading Technical Analysis & How to Generate Signals
Buy Trading Signal
A crossover of above zero signifies accumulation of commodity. 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 commodity. A value of below -10 is a short/sell signal. Values below -20 signify a strong downward trending market.
Sell Trading Signal
Commodity Trading Trend Line break with Chaikin’s money Flow
The money flow can be used to confirm commodity trend line breaks out or support/resistance level breaks-out.
If commodity price breaks an upward commodity trend line, Commodity traders should then wait for a confirmation signal from the indicator values of below -10.
Commodity Trading Trendline Break
If commodity price breaks an downward commodity trend line, Commodity traders should then wait for a confirmation signal from indicator values of above +10.
Commodity Trading Trendline Break
Divergence Commodity Trading
A divergence between this indicator & commodity 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 price makes a lower low while the Chaikins Money Flow makes a higher low.
A bearish divergence signal occurs when price makes a higher high while the Chaikins Money Flow makes a lower high.
