Nifty intraday is the term used to denote live quotes or live chart of nifty for a period of one trading day. In this article, we see how to trade equity or commodity markets using Chaikin Oscillator.
* As the indicator was developed by Marc Chaikin, it was named after him.
* Chaikin oscillator doesn’t measures the momentum of the price on nifty intraday chart instead it measures the momentum of the convergence divergence line.
* Moving average Convergence Divergence (MACD) formula is used to measure the momentum on live nifty chart. This makes the oscillator different from other indicators.
* Calculation is carried out in 4 steps as shown below:
Money Flow Multiplier = [(Close – Low) – (High – Close)] /(High – Low)
Money Flow Volume = Money Flow Multiplier x Volume for the Period
ADL = Previous ADL + Current Period’s Money Flow Volume
Chaikin Oscillator = (3-day EMA of ADL) – (10-day EMA of ADL)
* Macd line is present in chaikin oscillator which acts as a base line for predicting the trend of the nifty intraday.
* The macd line is given a value of zero.
* Two applications can be used while trading with chaikin osillator.
* Firstly, trend prediction using chaikin oscillator and MACD line.
* Secondly, buy sell signals using divergences formed on the oscillator.
* If the oscillator cuts the MACD line in the downward direction, it signs us the upcoming fall of the nifty.
* As well, if the indicator cuts the base line in upward direction, chances for nifty future to move up.
* As per divergence formations, if higher lows are formed, we call it as bullish divergence which indicated the upmove of the nifty future trading price
* If lower highs are formed, it is called as bearish divergence which generally is said to formed during the nifty intraday price declination.
Posted on: 2016-11-12 12:01:24 Updated on: 2016-11-12 12:05:32