ChaikinOscillator(Series,Double) Method

This method implements the Chaikin Oscillator (also known as the Chaikin A/D Oscillator) and evaluates this indicator for the latest and all previous periods for which there exists sufficient data.

[Visual Basic]
Overloads Public Shared Function ChaikinOscillator( _
   ByVal s As Series, _
   ByVal smoothingFactor As Double _
) As Series

[C#]
public static Series ChaikinOscillator( 
   Series s,
   double smoothingFactor
);

Parameters

s: A financial series.
smoothingFactor: The number between 0 and 1. The lower the number the more sensitive the indicator is.

Return Type

A series where the first term is the value of the oscillator using the last 10 days data, the previous term is the value of the oscillator on the previous period and so on.

Remarks

The Chaikin Oscillator presents the information contained within the A/D indicator in the convenient form of an oscillator. That is, the Chaikin Oscillator is simply the Moving Average Convergence Divergence indicator (MACD) applied to the Accumulation/Distribution Line.

Interpretation

A sell signal is when price action develops a higher high into overbought zones and the Chaikin Oscillator diverges with a lower high and begins to fall. Conversely, a buy signal is generated when price action develops a lower low into oversold zones and the oscillator diverges with a higher low and begins to rise. The Chaikin Oscillator can also be used to time entry to existing trends by either buying the dip (when the oscillator turns down) or selling the rally (when the oscillator turns up).

Evaluation

The Chaiken Oscillator for a given period is given by:

EMA_3(Accumulate/Distribution) - EMA_10(Accumulate/Distribution),

where EMA_3 and EMA_10 is the exponential moving average over 3 and 10 days respectively; and Accumulate/Distribution is the corresponding indicator over those 3 or 10 days respectively.

Illustration

If we are provided within the high, low and volume over the last 15 periods, then we will be able to evaluate the Chaikin Oscillator on the previous 5 trading days. Since the evaluation of the oscillator on a given period requires knowledge of the 10 previous periods data.

See Also

Language