Chaikin Money Flow Bitcoin Analysis & Money Flow Trading Signals
Created by Marc Chaikin
This an oscillator which measure the Accumulation/distribution of money that is flowing into and out of bitcoin crypto.
The indicator is based on the fact that the nearer the closing bitcoin price is to the high of the bitcoin price, the more the accumulation of bitcoin crypto.
Also the nearer the closing bitcoin price is to the low of the bitcoin price, the more the distribution of bitcoin crypto.
Chaikin Money Flow will be positive if bitcoin price consistently closes above the bar's midpoint with increasing volume.
However, if bitcoin price consistently closes below the bar's midpoint with increasing volume the indicator will be negative.
Bitcoin Analysis & How to Generate Signals
Buy Signal
A crossover of above zero signifies accumulation of bitcoin crypto. A value of above +10 is a buy/bullish signal. Values above +20 signify a strong upward trending market.
Buy Trading Signal
Sell Signal
A Zero line cross of below zero signifies distribution of bitcoin crypto. A value of below -10 is a short/sell crypto signal. Values below -20 signify a strong downward trending market.
Sell Trading Signal
Bitcoin Trend Line break with Chaikin’s money Flow
The money flow can be used to confirm bitcoin trend line breaks-out or support/resistance level breaks-out.
If bitcoin price breaks an upward bitcoin trend line, Bitcoin traders should then wait for a confirmation signal from the indicator values of below -10.
Bitcoin Trend Line Break
If bitcoin price breaks an downward bitcoin trend line, Bitcoin traders should then wait for a confirmation signal from indicator values of above +10.
Bitcoin Trend Line Break
Divergence Bitcoin Trading
A divergence between this indicator & bitcoin price often signals a pending reversal in market direction. However as with all divergences its best to wait for confirmation signal before trading the divergence.
A bullish divergence signal occurs when bitcoin price makes a lower low while the Chaikins Money Flow makes a higher low.
A bearish divergence signal occurs when bitcoin price makes a higher high while the Chaikins Money Flow makes a lower high.
