The Chaikin Money Flow oscillator generates bullish signals when the stock is under accumulation. There are three factors that determine if it is under accumulation. They also determine the strength of the accumulation.
- The first factor is whether the Chaikin Money Flow value is greater than zero?
- The second factor is the duration of the reading, how long the oscillator has been positive. The long positive reading indicates that the stock is under sustained accumulation.
- The third factor is the intensity of the oscillator. The oscillator should remain above zero and be able to increase and attain a certain level. The more positive the reading is, the more evidence of buying pressure and accumulation. A reading above .10 would be significant enough to warrant a bullish signal, while above .25 would be an indication of strong buying pressure. You should consider prior levels of the indicator to be sure.
The negative reading is just opposite.
