Volume Accumulation Oscillator (Chaikin Oscillator)

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Volume Accumulation Oscillator (Chaikin Oscillator)

Volume analysis is important for identifying internal strengths and weaknesses in a market. Very often, a divergence between volume and price movements can offer clues to an impending reversal.

Overview

The Volume Accumulation Oscillator (VAO) -- also called the Chaikin Oscillator after its designer Marc Chaikin -- is more sensitive to volume versus price than the On Balance Volume indicator.

VAO assigns a proportional amount of volume to the price according to the relationship between the closing price and the average price for the day.

• A close above the mean price is given a positive value and a close below the mean a negative value.
• When the market closes at either the high or low of the day, the volume is given full value.

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