Chaikin Money Flow Divergence Indicator generation III is modern indicator with complex mathematic algorithm (BJF Trading Group innovation). You will see divergenses on the chart and indicator. Arrows painted above/below the open bar and not in the past. You can see when actually you can trade. It is never to late! Signals based on closed bars so the arrows above/below open bar never disappear.
Chaikin Money Flow Explanation
Developed by Marc Chaikin, Chaikin Money Flow measures the amount of Money Flow Volume over a specific period. Money Flow Volume forms the basis for the Accumulation Distribution Line. Instead of a cumulative total of Money Flow Volume, Chaikin Money Flow simply sums Money Flow Volume for a specific look-back period, typically 20 or 21 days. The resulting indicator fluctuates above/below the zero line just like an oscillator. Chartists weigh the balance of buying or selling pressure with the absolute level of Chaikin Money Flow. Chartists can also look for crosses above or below the zero line to identify changes on money flow.
Chaikin Money Flow Calculation
There are four steps to calculating Chaikin Money Flow (CMF). The example below is based on 20-periods. First, calculate the Money Flow Multiplier for each period. Second, multiply this value by the period's volume to find Money Flow Volume. Third, sum Money Flow Volume for the 20 periods and divide by the 20 period sum of volume.
- Money Flow Multiplier = [(Close - Low) - (High - Close)] /(High - Low)
- Money Flow Volume = Money Flow Multiplier x Volume for the Period
- 20-period CMF = 20-period Sum of Money Flow Volume / 20 period Sum of Volume
MT4 Indicator Chaikin Money Flow Divergence
MT4 Indicator Chaikin Money Flow Divergence indicates fractal divergence by Chaikin Money Flow indicator.When divergence appears between Chaikin Money Flow and the price, it indicates a high probability that the current trend will finish soon. A signal to buy is when a new Low-fractal is formed below the previous one and a corresponding CMF value is higher than the previous one. A signal to sell is when a new Up-fractal is formed above the previous one and a corresponding CMF value is lower than the previous value. The indicator has a lot of customizable settings. The indicator has a lot of customizable settings.