The Chaikin Oscillator was not named in an especially clever way. It’s a graph pattern that looks like an oscillator, and was created by Marc Chaikin.
The graph tracks buying and selling pressure, and is color-coded in red and green (green for buying pressure and red for selling pressure...not Christmas-related). It does this using the Accumulation Distribution Line (ADL).
The ADL is calculated in a series of steps: 1) Determine the Money Flow Multiplier. 2) Find Money Flow Volume by multiplying the Money Flow Multiplier by volume for the period. 3) Add the current period money flow volume to the previous ADL. 4) Subtract the three-day EML of ADL from the ten-day EMA of ADL.
Buying pressure is shown when a stock closes in the upper half of the period’s range, and selling pressure when the stock closes on the lower half. The formula finds the difference between the three-day moving average, and the 10-day moving average of the ADL. The resulting calculations are tracked on a line graph from 100 to -100, and show closing performance during a 21-day period. The chart is really an indicator of pressure trends...buying or selling.
