Chaikin Money Flow Analysis and Money Flow Signals
Created by Marc Chaikins
This an oscillator which measure the Accumulation/distribution of money that's flowing into & out of a currency pair.
The trading 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 market price, the more the distribution of the currency pair.
Chaikin Money Flow will be positive if the 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 technical indicator will be negative.
Forex Analysis & Generating Signals
Buy Trade Signal
A cross-over of above zero signifies accumulation of a forex pair. A value of above +10 is a buy/bullish signal. Values above +20 signify a strong upwards trending market.
Buy Trade 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 trade 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 upwards trend line, traders should then wait for a confirmation signal from the trading indicator readings of below -10.
Trend Line Break - Sell Trade Signal
If price breaks an down ward trendline, traders should then wait for a confirmation signal from technical indicator values of above +10.
Trend Line Break - Buy Signal
Divergence Trading
A divergence between this trading indicator and price often signals a pending reversal in market direction. However as with all divergences its best to wait for confirmation signal before trading the divergence.
A bullish divergence signal forms when price makes a lower low while the Chaikin's Money Flow makes higher low.
A bearish divergence signal forms when the price makes higher high while the Chaikins Money Flow trading indicator makes a lower high.
Get More Topics:
- Doji Candlesticks & Marubozu Candles Pattern
- Trendline Break Trade XAU USD Trend-line Reversal Signals
- EURSGD System EURSGD Trade Strategy
- What are Major Currency Pairs in Forex Trading?
- How to Day Trade XAU USD Using Pivot Points Levels & Reversal Gold Trend Trading Indicators
- How Can I Place Alligator Gold Indicator in Chart on MetaTrader 4 Software?
- Ichimoku Kinko Hyo XAU USD Indicator Analysis in XAU USD Charts
