Chaikin Oscillator on a Live Bitcoin Chart

What it shows

The line swings around a zero guide in its own pane. The scale is in volume units, so its height depends on how much the instrument trades.

How Pravex works it out

For each candle, work out where the close sits in the range: ((close − low) − (high − close)) ÷ (high − low). It is 1 at the high and −1 at the low, and 0 when high equals low.
Multiply by the candle’s volume, then keep a running total of those values from the first candle. That total is the accumulation/distribution line.
Average that total with two exponential averages: one over the quick length and one over the slow length.
Chaikin Oscillator = fast average − slow average.

Settings

Setting	Default	What changing it does
Quick average length	3	The length of the quick average. A shorter value reacts to each candle; a longer one smooths the quick side.
Slow average length	10	The length of the slow average. The wider the gap between the two lengths, the larger and slower the swings.

How traders read it

The zero cross is the most used signal. Crossing above zero says the accumulation total is rising quicker than its slower average, which happens when volume is landing with closes near the highs. Crossing below says the opposite.

Readings far from zero in either direction say the pace of accumulation or distribution has been strong for a while. A fading line while price still rises is a sign the volume behind the move is thinning.

It also works as a second opinion on breaks. If price breaks a level and the oscillator stays flat, the break had little volume pressure behind it.

When it misleads

The running total starts at the first candle loaded, but the oscillator only uses differences between averages, so that start does not matter. What does matter is that each candle is sorted by where it closed in its range, so one candle with huge volume and a middling close can swing the line. A flat candle with no range adds nothing. Without volume in the bars, the total never leaves zero.

Questions and answers

What is the Chaikin Oscillator saying when it sits above zero?

The 3-candle average of the accumulation/distribution total is above its 10-candle average. The total has been rising quicker lately, so volume has been landing with closes in the upper part of the range.

How is this different from Chaikin Money Flow?

Chaikin Money Flow sums the volume-weighted close position over a window and divides by volume, giving a value between −1 and 1. The Chaikin Oscillator compares two averages of a running total, so its scale follows volume.

Why is the Chaikin Oscillator number in the millions?

Its scale is the volume of the market, because it is built from volume times a close position. A heavily traded coin gives huge numbers. Compare the line with its own past swings, not with another market.

Can I use 3 and 10 on every timeframe?

They are the Pravex defaults and keep the oscillator quick. On a 15-minute chart they react to almost every candle; on the daily they cover two weeks. Widen the gap, say 5 and 20 (an example), for fewer and slower swings.