Chaikin Money Flow Technical Analysis and Money Flow Signals
Developed by Marc Chaikin
This an oscillator MT5 indicator MT5 indicator which measure the Accumulation/distribution of money that is flowing into and out of a currency pair.
The indicator is based on the fact that the nearer the closing forex price is to the high of the price, the more the accumulation of the currency pair.
Also the nearer the closing forex price is to the low of the price, the more the distribution of the currency pair.
Chaikin Money Flow will be positive if forex price consistently closes above the bar's midpoint with increasing volume.
However, if forex price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.
FX Technical Analysis & How to Generate Signals
Buy Trading Signal
A crossover of above zero signifies accumulation of a currency pair. A value of above +10 is a buy/bullish signal. Values above +20 signify a strong upwards trending market.
Buy Forex Signal
Sell Trading Signal
A Zero line cross of below zero signifies distribution of a currency pair. A value of below -10 is a short/sell signal. Values below -20 signify a strong downward trending market.
Sell Forex Signal
Forex Trend Line break with Chaikin’s money Flow
The money flow can be used to confirm forex trend line breaks out or support/resistance level breaks-out.
If forex price breaks an upward forex trend line, Forex traders should then wait for a confirmation signal from the indicator values of below -10.
Forex Trendline Break - Sell Signal
If forex price breaks an downward forex trend line, Forex traders should then wait for a confirmation signal from indicator values of above +10.
Forex Trendline Break - Buy Signal
FX Divergence Forex Trading
A divergence between this MT5 indicator and forex price often signals a pending reversal in market direction. However as with all divergences its best to wait for confirmation signals before forex trading the divergence.
A bullish divergence trading signal forms when price makes a lower low while the Chaikin Money Flow makes higher low.
A bearish divergence signal occurs when the price makes higher high while the Chaikins Money Flow indicator makes a lower high.
