Chaikins Money Flow Analysis & Money Flow Signals
Created 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 price is to the high of the price, the more the accumulation of the forex pair.
Also the nearer the closing price is to the low of the price, the more the distribution of the currency pair.
Chaikins Money Flow will be positive if price consistently closes above the bar's midpoint with increasing volume.
However, if price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.
FX Analysis & How to Generate Signals
Buy Trade 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 Signal
Sell 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 downwards trending market.
Sell Signal
Trend Line 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 price breaks an upward trend line, traders should then wait for a confirmation signal from the indicator values of below -10.
Trend Line Break - Sell Signal
If price breaks an downwards trendline, traders should then wait for a confirmation signal from indicator values of above +10.
Trend-Line Break - Buy Signal
Divergence FX Trading
A divergence between this MT5 indicator and 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 Chaikins Money Flow makes higher low.
A bearish divergence signal forms when the price makes higher high while the Chaikin Money Flow indicator makes a lower high.
