Chaikin Oscillator
By LuxAlgoApr 13, 2020
The Chaikin Oscillator plots the difference between a 3-period EMA and a 10-period EMA of the Accumulation/Distribution Line, producing a zero-centered line that tracks shifts in the momentum of volume flow. The script accumulates money flow volume bar by bar into the A/D Line, then differences the two EMAs of that series, so the plot crosses zero whenever short-term accumulation overtakes or falls behind its longer trend. It is implemented here as the standard raw form of Marc Chaikin's oscillator, with the classic 3 and 10 EMA lengths as defaults.
How to Trade the Chaikin Oscillator?
- Cross above the Zero Line: accumulation momentum has turned positive, commonly read as bullish confirmation.
- Cross below the Zero Line: flow momentum turning negative, the bearish counterpart.
- Slope between crosses: a rising oscillator says flow is building behind the move; a falling one says it is thinning before any cross prints.
- Divergence: a fresh price high against a lower oscillator high questions the volume behind the advance; the bullish mirror applies at lows.
Expect whipsaws around zero in quiet tape; treat the line as a second opinion: a breakout arriving while the oscillator climbs through zero carries volume momentum that the same break against a falling line lacks.
Chaikin Oscillator Settings
- Fast Length (default 3): the fast EMA applied to the accumulation/distribution line. Raising it slows reactions and mutes small swings.
- Slow Length (default 10): the slow EMA forming the baseline. Widening the gap between the lengths exaggerates swings; narrowing it flattens them.
Alerts
The script includes Zero Cross Up and Zero Cross Down alert conditions, triggered when the oscillator crosses above or below zero.
Frequently Asked Questions
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