Chaikins Money Flow Indices Technical Analysis and Money Flow Indices Trading Signals

Developed by Marc Chaikin

This an oscillator which measure the Accumulation/distribution of money that is flowing into and out of indices.

The indicator is based on the fact that the nearer the closing stock indices price is to the high of the indices price, the more the accumulation of indices.

Also the nearer the closing stock indices price is to the low of the indices price, the more the distribution of indices.

Chaikins Money Flow will be positive if stock indices price consistently closes above the bar's midpoint with increasing volume.

However, if stock indices price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.

Indices Technical Analysis and Generating Indices Trading Signals

Buy Indices Trading Signal

A crossover of above zero signifies accumulation of indices. A value of above +10 is a buy/bullish signal. Values above +20 signify a strong upward trending market.

Buy Indices Trading Signal

Sell Indices Trading Signal

A Zero line cross of below zero signifies distribution of indices. A value of below -10 is a short/sell indices signal. Values below -20 signify a strong downward trending market.

Sell Indices Trading Signal

Indices Trend Line break with Chaikin’s money Flow

The money flow can be used to confirm indices trend line breaks or support/resistance level breaks.

If stock indices price breaks an upward indices trend line, Indices traders should then wait for a confirmation signal from the indicator values of below -10.

Indices Trend Line Break - Sell Indices Trading Signal

If stock indices price breaks an downward indices trend line, Indices traders should then wait for a confirmation signal from indicator values of above +10.

Indices Trend Line Break - Buy Indices Trading Signal

Divergence Indices Trading

A divergence between this indicator and stock indices price often signals a pending reversal in market direction. However as with all divergences its best to wait for confirmation signals before trading the divergence.

A bullish divergence signal occurs when stock indices price makes a lower low while the Chaikins Money Flow makes a higher low.

A bearish divergence signal occurs when stock indices price makes a higher high while the Chaikins Money Flow makes a lower high.