Generated directly from GNY’s proprietary data warehouse, the Chaikin Oscillator, Actual Volume chart has the ability to be viewed over a 365-day span. The chart is displayed as an oscillating line graph chart overlaid with a horizontal zero line, which is known as the accumulation-distribution line.
On the chart, there are two oscillating lines, one labeled Chaikin AD and the other labeled Volume. The Chaikin AD line represents the rate of change in the asset’s accumulation/distribution, and the Volume line represents the amount of the asset that changed hands during the selected time period. Although the Volume line is not required for one to read the Chaikin Oscillator, it is included to add additional insight into the ongoing state of the market for the asset in question.
The Chaikin Oscillator measures the momentum of the accumulation/distribution (buying and selling pressure) of an asset based on the Moving Average Convergence Divergence (MACD). This indicator can be helpful when it comes to identifying and verifying price trends and reversals.
Over a period of time, the rate of change in an asset’s accumulation/distribution will cause the Chaikin AD line to oscillate above and below the zero line. This movement above and below the zero line is what produces the chart’s trading signals.
When the Chaikin AD oscillating line moves from below the zero line to above it, it signals that an accumulation trend is ongoing, which is a bullish signal for traders seeking an entry. Conversely, when the oscillating line moves from above the zero line to below it, this indicates that a distribution trend is ongoing and traders should consider their positions.
Weaker buy signals are produced when the oscillating line positioned above the zero line makes a move down towards the zero line but turns upwards again before crossing into negative territory. Weaker sell signals are produced when the oscillating line positioned below the zero line makes a move up towards the zero line but turns downward again before crossing into positive territory.
Reading the Chaikin Oscillator chart in conjunction with a candlestick chart to judge the trending price action may also reveal divergence or reversal signals.
Bullish Divergence: Lower lows on the candlestick chart and higher lows on the Chaikin Oscillator
Bearish Divergence: Higher highs on the candlestick chart and lower highs on the Chaikin Oscillator
It is recommended to consult additional charts within the Range Report such as the Moving Average Convergence/Divergence (MACD) and RSI, to help confirm the strength of the Chaikin Oscillator chart’s signals.