The Chaikin Oscillator Indicator identifies the direction of market momentums on MT4 charts. It considers the volume and the pace of price movements to distinguish between the bullish and bearish forces behind the market.
Like other Chaikin indicators, Chaikin Oscillator is also quite sensitive to price-action changes. It applies multiple simple moving averages for calculating the value that represents the momentum status of the market.
The indicator uses a straightforward and decent technique for displaying the momentum signals, which is readable to traders with any level of past trading experience.
Moreover, Chaikin Oscillator is an MTF indicator which means it works on all timeframes within the MT4 platform. According to our review, this indicator works best when applied for analyzing the momentum on forex charts.
The Chaikin Oscillator comprises a fast (3-period) and a slow (10-period) simple moving average for calculating the momentum index. We’ll determine the direction of the momentum depending on the positivity/negativity of the Chaikin value.
So, when the oscillator curve breaks above zero-level, consider it a bullish reversal of the market momentum. Conversely, the Chaikin value turns negative to signal a bearish reversal. Once the indicator confirms a momentum direction, check the price level for deciding on a buy/sell order.
For example, when the Chaikin Oscillator signals a bearish momentum, the price needs to be at the top of the chart, rebounding downwards before you go short.
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- The Chaikin Oscillator value bounces upwards from the zero-level
- The price rebounds higher from the recent market low
- Exit long the Chaikin value turns negative
- The indicator curve dives below the zero-level
- The price turns lower from the top of the chart
- Exit short after the indicator value becomes positive.