Chaikin Oscillator is develop by Marc Chaikin. Its measures the momentum of the Accumulation Distribution Line using the MACD formula.
1. Money Flow Multiplier = [(Close - Low) - (High - Close)] /(High - Low)
2. Money Flow Volume = Money Flow Multiplier x Volume for the Period
3. ADL = Previous Accumulation Distribution Line + Current Period's Money Flow Volume
4. Chaikin Oscillator = (3-day EMA of Accumulation Distribution Line) - (10-day EMA ofAccumulation Distribution Line)
Since Chaikin Oscillator is an indicator for indicator, it can be use to confirm other indicator such as RSI and MACD. Generally, buying bias is stronger when the indicator is positive area and selling bias is stronger when the indicator is negative. You can look for crosses into positive area for bullish divergences and negative area for bearish divergences. Chaikin Oscillator is not a stand alone indicator. You should use other indicator to confirm its buying or selling trend.
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