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The Chaikin Oscillator is calculated by subtracting an exponential moving average of the Accumulation Distribution line with a 10 bars lookback period from an exponential moving average of the Accumulation Distribution line with a 3 bars lookback period.
This Chaikin Oscillator indicator accepts two parameters. The first one, called 'slow' refers to the lookback period of the first exponential moving average while the second one, called 'fast' refers to the lookback period of the second exponential moving average.
This indicator is used to monitor the flow of money in and out of the market. A bullish signal occurs when the close price makes a new low while the Chaikin Oscillator fails to make a new low (bullish divergence). A bearish signal occurs when the close price makes a new high while the Chaikin Oscillator fails to make a new high (bearish divergence).
A third parameter could be added to this function, which is a number of bars to use when we calculate the cumulative sum in the Accumulation Distribution indicator. Instead of using all the available bars when calculating the cumulative sum, we can choose to select only the last 'X' bars. The value of 'X' could be our third parameter for this Chaikin Oscillator function.
