Chaikin Oscillator CO
Technical Indicator
The CO is calculated by subtracting a 10-period exponential moving average (EMA) of the ADL from a 3-period EMA of the ADL. The resulting value is plotted as a histogram, with positive values indicating buying pressure and negative values indicating selling pressure. The CO can also be plotted as a line, which represents the difference between the 3-period and 10-period EMAs of the ADL.
Traders use the CO to identify trend reversals and confirm breakouts. If the CO crosses above the zero line, it is considered a bullish signal, indicating an increase in buying pressure. Conversely, if the CO crosses below the zero line, it is considered a bearish signal, indicating an increase in selling pressure. Traders also look for divergences between the price of a security and the CO, which can indicate a potential trend reversal.
Formula for the Chaikin Oscillator:
CO = EMA(ADL, 3) - EMA(ADL, 10)
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