The Chaikin Money Flow Metatrader 4 indicator is one of the best momentum indicators that gauges the amount of Money Flow Volume over a predefined period.
This indicator clearly measures the type of pressure which controls the market. By this we mean, the indicator clearly tells us when there’s a seller’s pressure or buyer’s pressure on the market.
The central idea behind this indicator is that when the high is close to the closing price an accumulation is said to be looming, while a distribution is said to be evident when the closing price is closer to the low.
- In order to fully understand how the market works, pay more attention to how the price of the asset reacts to the line which fluctuates around the zero-level.
- When the line of the Chaikin Money Flow indicator line shows a reading that is above zero, it implies price steadily closes in the upper half of its daily range (a positive CMF), and implies that the market is strong.
- The market is said to be weak when the Chaikin Money Flow shows a negative reading (below zero), which means that price steadily closes in the lower half of its daily range.
- The Chaikin Money Flow indicator can find use during trend confirmation, determining of trend strength and to spot likely trend reversals or breakouts.
Feel free to explore the Chaikin Money Flow indicator’s different parameters and settings to create your own personalized indicator setup.
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Chaikin Money Flow Forex Indicator Chart (EUR/USD H1 Chart Example)
Here’s an example of how the indicator should look like when loaded onto the Metatrader 4 chart.
Finding Buy and Sell Triggers With The Chaikin Money Flow MT4 Indicator
Buy Signal: Go long when the Chaikin Money Flow indicator prints a red line above the zero-horizontal level. Market sentiment is said to be bullish when the blue line of the Alligator indicator crosses below the lime and red lines in a bottom up fashion.
Sell Signal: Go short when the Chaikin Money Flow indicator prints a red line below the zero-horizontal level. Market sentiment is said to be bearish when the blue line of the Alligator indicator crosses above the lime and red lines in a top downward manner.
Exit buy trade: Close all buy orders if while a bullish trend is running, the red line of the Chaikin Money Flow indicator dips below the 0.00 level. Else, close all buy orders if the lime line of the Alligator indicator intersects its red line.
Exit sell trade: Close all sell orders if while a bearish trend is running, the red line of the Chaikin Money Flow indicator surges above the 0.00 level. Else, do same if the lime line of the Alligator indicator intersects its red line.
Tips: Having a good look at the previous reading on the Chaikin Money Flow indicator before starting your trading day can offer an idea of how long and sustainable the buying/selling pressure was.
This implies that having an extended bullish session (accumulation), might point to sentiments staying positive for the remaining part of the day.
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More Info About This Indicator
Tradable Currency pairs: Any
Trading Platform: MT4
Time frames: M1, M5, M15, M30, H1, H4, D1, W1
Indicator Type: Momentum
Copy and paste the indicator in the MT4 indicators data folder.
Then restart the MT4 terminal and attach it to any chart.