Chaikin Oscillator [ChOsc]

Return to Complete List of Functions

The Chaikin Oscillator function determines the trend in the momentum of a financial data series by comparing two exponential moving averages of Accumulation/Distribution. Accumulation/Distribution is calculates the momentum of a financial data series using the trading volume to assess the significance of daily price movement. Parameters ------------------ Close         The closing price of the security for each given day. High          The high price of the security for each given day. Low           The low price of the security for each given day. Volume      The number of shares of the security that were traded during each given day. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including other price values and averaged prices. Indicator Value ------------------------ The Accumulation/Distribution momentum indicator determines whether a stock is primarily being bought (accumulated) or sold (distributed) during a trading day. It is based on the closing price relative to the midpoint of the high and low prices for the day. If the closing price is higher than the midpoint, it is assumed that more shares were bought during the day than were sold. The price value is multiplied by the volume and added to the momentum from the previous day. The volume is used to factor in how much of the market was behind the relative price change. The Chaikin Oscillator subtracts a 10-day exponential moving average of the Accumulation/Distribution indicator from a 3-day exponential moving average of that same value. This is the same as applying a Value Oscillator to the Accumulation/Distribution indicator. Since the Chaikin Oscillator uses exponential moving averages, it will have values at the beginning of the data series. However, you may want to ignore values before the first 10-day period has completed. Usage ----------- The Chaikin Oscillator primarily detects trends in the Accumulation/Distribution indicator, which is a measurement of the momentum of a financial data series. Values above zero indicate that the security is being bought (accumulated). Values below zero indicate that the security is being sold (distributed). The farther the value is from zero, the more volume and larger price movements that are taking place. The peaks and valleys of the oscillator can be used to detect when the market is changing direction. Note: The Accumulation/Distribution indicator does not use the opening price or previous closing price to track price movements. Instead, it uses the midpoint between the high and low prices for the day to determine whether the closing price is significant relative to the remainder of trading for the day. Therefore, the overall price for the day could be decreasing, but the security could be evaluated as being accumulated at the end of the day if the closing price raised above the midpoint between the high and low prices for the day. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis. It was originally developed by Marc Chaikin.