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Chaikins Money Flow Stock Indices Technical Analysis and Money Flow Stock Indices Signals

Developed by Marc Chaikin


This an oscillator which measure the Accumulation/distribution of money that is flowing into and out of a stock indices.


The indicator is based on the fact that the nearer the closing stock index price is to the high of the stock index price, the more the accumulation of the stock indices.


Also the nearer the closing stock index price is to the low of the stock index price, the more the distribution of the stock indices.

Chaikins Money Flow Stock Indices Indicator


Chaikins Money Flow will be positive if stock index price consistently closes above the bar's midpoint with increasing volume.


However, if stock index price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.



Stock Indices Technical Analysis and Generating Stock Indices Signals


Buy Stock Indices Signal

A crossover of above zero signifies accumulation of a stock indices. A value of above +10 is a buy/bullish signal. Values above +20 signify a strong upward trending market.

Buy Stock Indices Signal Chaikins Money Flow indicator

Buy Stock Indices Signal


Sell Stock Indices Signal

A Zero line cross of below zero signifies distribution of a stock indices. A value of below -10 is a short/sell stock indices signal. Values below -20 signify a strong downward trending market.

Sell Stock Indices Signal

Sell Stock Indices Signal


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Stock Indices Trend Line break with Chaikin’s money Flow



The money flow can be used to confirm stock indices trend line breaks or support/resistance level breaks.


If stock index price breaks an upward stock indices trend line, Stock Indices traders should then wait for a confirmation signal from the indicator values of below -10.

stock indices trend line break sell stock indices signal

Stock Indices Trend Line Break


If stock index price breaks an downward stock indices trend line, Stock Indices traders should then wait for a confirmation signal from indicator values of above +10.

stock indices trend line break buy stock indices signal

Stock Indices Trend Line Break



Divergence Stock Indices

A divergence between this indicator and stock index price often signals a pending reversal in market direction. However as with all divergences its best to wait for confirmation signals before trading the divergence.


A bullish divergence signal occurs when stock index price makes a lower low while the Chaikins Money Flow makes a higher low.


A bearish divergence signal occurs when stock index price makes a higher high while the Chaikins Money Flow makes a lower high.

 

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