Chaikins Money Flow Analysis and Money Flow Signals
Developed by Marc Chaikin
This an oscillator which measure the Accumulation/distribution of money that is flowing into and out of a xauusd.
The indicator is based on the fact that the nearer the closing trading price is to the high of the price, the more the accumulation of the xauusd.
Also the nearer the closing trading price is to the low of the price, the more the distribution of the xauusd.
Chaikins Money Flow will be positive if the market 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 indicator will be negative.
Gold Analysis & Generating Signals
Buy Signal
A crossover of above zero signifies accumulation of a xauusd. A value of above +10 is a buy/bullish trading signal. Values above +20 signify a strong upward trending market.
Buy Signal
Sell XAUUSD Signal
A Zero line cross of below zero signifies distribution of a xauusd. A value of below -10 is a short/sell trade signal. Values below -20 signify a strong downward trending market.
Sell Trade Signal
Trendline break with Chaikin’s money Flow
The money flow can be used to confirm trend line breaks out or support/resistance level breaks out.
If trading price breaks an upward trend line, traders should then wait out for a confirmation signal from the indicator readings of below -10.
Trend-Line Break
If trading price breaks an downward trend line, traders should then wait out for a confirmation signal from indicator readings of above +10.
Trendline Break
Divergence Gold
A divergence between this trading indicator and price often signals a pending reversal in the market direction. However as with all divergences its best to wait for a confirmation signal before trading the divergence trading setup.
A bullish divergence signal occurs and happens when the price makes and forms a lower low while the Chaikin Money Flow makes a higher low.
A bearish divergence signal happens when the price makes and forms a higher high while the Chaikin Money Flow makes a lower high.
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