Chaikins Money Flow Analysis and Money Flow Signals
Created and Developed by Marc Chaikins
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This technical indicator suggests that the closer the closing price is to the high price, the more there is an accumulation of the forex pair.
A hidden bearish divergence trading configuration manifests itself following a corrective movement within a sustained downtrend.
Chaikins 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.
FX Analysis and Generating Signals
Buy Signal
A move above zero shows accumulation in a forex currency pair. A value above +10 is a signal to buy/bullish. Values above +20 indicate a strongly trending market upwards.
Buy Signal
Sell Trade Signal
A cross below the zero mark indicates the distribution of a foreign exchange currency pair. A value under -10 serves as a sell signal for short trades, while values below -20 indicate a strong downward trend in the market.
Sell Signal
Trend Line break with Chaikin’s money Flow
The cash waft can be used to verify trendline breaks out or aid/resistance level breaks out.
If the price breaks an upwards trend line, traders should then wait out for a confirmation trading signal from the indicator readings of below -10.
Trend-Line Break - Sell Trade Signal
If the price goes past a line showing a downward trend, traders should look for a sign confirming the trade from indicator numbers over +10.
Trend-Line Break - Buy Trading Signal
Divergence Trading
A disparity between this trading indicator and price frequently indicates an approaching shift in the market's direction. Nonetheless, as with all divergence setups, it's best to wait and relax for a confirmation trading signal before executing the divergence trading configuration.
A bullish divergence indication materializes when the price establishes a new lower low as the Chaikin's Money Flow simultaneously registers a higher low.
A bearish divergence happens when the price goes up and makes a higher peak, but the Chaikins Money Flow indicator makes a lower peak.
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