The 3-day EMA of the Accumulation/Distribution Line minus its 10-day EMA. An oscillator that measures the changing momentum of volume-based accumulation and distribution, and its divergence from price.
The Chaikin Oscillator is a volume-based momentum indicator devised by Marc Chaikin.
The idea has one extra twist to it.
Rather than working on price directly, it is easiest understood as applying the logic of MACD to the A/D Line (Accumulation/Distribution Line).
The A/D Line is a cumulative line that weights each day's volume by where price closed within the bar. It compresses the long-run trail of accumulation (buying up) and distribution (selling out) into a single line.
The Chaikin Oscillator takes that A/D Line and subtracts its 10-day EMA from its 3-day EMA.
In other words, it takes the difference between "the short-term momentum of accumulation/distribution" and "the somewhat longer-term momentum of accumulation/distribution." Think of it as doing to volume-based money flow (the A/D Line) what MACD does to price.
What it measures is not price itself, but a quantity closer to a second derivative: whether the accumulation or distribution of money is now accelerating or decelerating.
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