Chaikin Oscillator

Introduction
Line Accumulation / Distribution was discussed in the previous edition. Here we explore the indicator, which is based on the concept behind the lines Accumulation / Distribution, namely Oscillator or Chaikin Oscillator Accumulation / Distribution Chaikin, as he is sometimes called, named after its creator - Marc Chaikin.

Recall that the basic idea Lines Savings / distribution is that the degree of pressure the buyers or sellers may be the location of the closure, on the maximum and minimum for the relevant time period. Pressure buyers prevails when market instruments rose in the upper half of the range of maximum / minimum for a given period, and the pressure is dominated by sellers when the market rose a tool in the lower half of the trade range for a given period.

CIEN graph shows the ratio of Accumulation / distribution of each period, Lines Savings / distribution, and Chaikin Oscillator. The same four points were noted in the article on Line Savings / distribution in the last issue of the magazine.

Methodology
Chaikin Oscillator is simply an indicator of convergence-divergence of moving averages (MACD) applied to the line Savings / distribution. The formula takes into account the difference between the 3-day exponential moving average and the 10-day exponential moving average of the line of Savings / distribution. Also, as the MACD-Histogram is an indicator to predict the crossing of moving averages in MACD, Chaikin Oscillator is an indicator to predict changes in the lines Accumulation / Distribution.

Many of those same signals that are applied to the MACD, are also applicable to the Chaikin Oscillator. However, keep in mind that these signals belong to the lines Savings / distribution, rather than directly to a market-based instruments.

* More detailed information on the MACD indicator signals on the various types of positive and negative divergence, and crossing the center line can be found in previous issues of the journal.

Also, as an indicator MACD enters pulse characteristics for the moving averages, Chaikin Oscillator offers Pulse characteristics Lines Savings / distribution, which is sometimes a bit late. By inserting a particular momentum Oscillator Chaikin will Line Savings / distribution. Schedule CIEN confirms that movements Lines Savings / distribution normally precede corresponding divergence in the Chaikin Oscillator.

1. July negative divergence in the Oscillator Chaikin presaged imminent weakness in the lines Accumulation / Distribution. It was a divergence in the form of tilt, which was characterized by a lack of distinctive peaks for the formation of divergence. Chaikin Oscillator has reached the maximum of approximately one week before the lines Accumulation / Distribution and formed Medvezhye crossing the median line 2 weeks later. When the indicator is negative, it implies that the momentum for Liniya Stores / Distribution negative, or bearish, which ultimately adversely affect the market-based instruments.

2. August positive divergence Chaikin Oscillator presaged a sharp increase in the line Accumulation / Distribution. This divergence has been longer and could be seen as a divergence of cuts. In the divergence of cuts, there are two significant bottom, one above the other, which form the divergence. Bullish or positive momentum was confirmed when the Oscillator Chaikin byche formed crossing the median line at the end of August.

Bychi signals
There are two bull signal that can be derived from the Chaikin Oscillator: positive divergence, and crossing the median line. Because the Chaikin Oscillator is an indicator for the indicator, prudent to seek confirmation of a positive divergence, for example, in the bull crossing the moving average before treat it as a bullish signal. Schedule of "Coca Cola Co." is an excellent example of a positive divergence, which was confirmed by crossing the median line.

Positive divergence is sharp and clear. When using an indicator for the indicator, it is desirable to take only the strongest signals. Note the steepness of the positive divergence.
1. Byche crossing the median line occurred Oscillator Chaikin before Line Stores / Distribution burst recovery to a new peak.
2. At the intersection of the median line (green dotted line), the action also violated the resistance, and the bullish signal was confirmed.

Bear signals
By analogy with bychimi signals, there are two bear signal, which can be obtained using the Chaikin Oscillator: a negative divergence and Medvezhye crossing the median line. Before we consider a negative divergence as a bearish signal, should wait for confirmation, which can be obtained with the bear crossing the median line. MRK graph shows the recent bearish signal, which coincided with the breakthrough act of support.

Negative divergence is not so sharp and clear as in the case of a positive divergence in the KO, but nevertheless it is visible. Divergence, which cover long periods of time, it is sometimes difficult time for the trade.
1. In this example, easily visible reflection of the price activity on the lines and Chaikin Oscillator Accumulation / Distribution. The blue lines indicate the period when the share trade, mainly in the side band for 13 days. However, many closures during this period were below the mid-day range, and some were near the daily minimum. Pay attention to traffic and lines Chaikin Oscillator Accumulation / Distribution during this period, both markedly decreased.
2. Medvezhye crossing the median line, confirmed the divergence occurred only recently and coincided with the breakthrough act of the line support and breakthrough Line Accumulation / Distribution of its trend line.

Conclusion
Oscillator Chaikin well used to add momentum to the line Savings / distribution, but can sometimes add a bit redundant momentum and be difficult to interpret. Moving averages, used in it are relatively short and therefore would be more sensitive to changes in the lines Accumulation / Distribution. Sensitivity is important, but must also provide an opportunity to interpret the indicator. In graphics programs, you can try to change the order of moving averages of the indicator (option available in most graphic programs) to smooth out fluctuations. This is definitely an indicator should be used in combination with other aspects of technical analysis.

Cash flow Chaikin eliminates excessive volatility of the shortcomings encountered in the Chaikin Oscillator (Chaikin Indicator Cash flow was examined in a previous issues of the journal.)

Arthur Hill
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