Correlation analysis involves a “dependent” and an “independent” variable. Correlation analysis measures whether or not a change in the independent variable will result in a change in the dependent variable.

A low correlation coefficient (e.g., ±0.10) suggests that the relationship between the two variables is weak or non-existent. A high correlation indicates that the dependent variable (e.g., the security’s price) will change when the independent variable (e.g., an indicator) changes.

The direction of the dependent variable’s change depends on the sign of the coefficient. If the coefficient is a positive number, then the dependent variable will move in the same direction as the independent variable; if the coefficient is negative, then the dependent variable will move in the opposite direction of the independent variable.

A useful feature of correlation analysis is its predictive capability, because the correlation coefficient shows how well a change in the independent variable (e.g., an indicator) predicts a change in the dependent variable (e.g., the security’s price).

The Correlation indicator can be used in three ways:
- Correlation of a security’s price to an indicator
- Correlation of one security to another
- Correlation of one indicator to another

The CP Volumentum Trend indicator dynamically integrates price and volume into a single indicator. The indicator responds to a divergence in volume from the norm, taking advantage of the fact that volume generally increases significantly at market turning points.

Volume divergence is evaluated against current price action and plotted as both a trend and a strength indicator. The indicator identifies high probability trading zones and automatically adapts to changes in volatility. The strength indicator is used to confirm the conviction behind the Volumentum Trend.

Commodity Selection Index (CSI) attempts to identify which commodities are the most suitable for short-term trading. The larger the CSI value, the stronger is the trend and volatility characteristics associated with the asset.

This indicator should only be used by traders who can handle large amounts of volatility as it indicates strong trending, but reversals are always possible.

A high CSI rating demonstrates that the commodity has strong volatility characteristics and trending. The Directional Movement factor brings these characteristics in the calculation, the volatility characteristic by the Average True Range factor.

If CSI rating is high it means that the commodity has strong trending and volatility characteristics. The volatility characteristics are brought out by the Average True Range factor, and the trending characteristics are brought out by the Directional Movement factor in the calculation.

Related Articles:

Investopedia:
A technical momentum indicator that attempts to identify which commodities are the most suitable for short-term trading. (full article)

ForexRealm:
As an indicator of momentum, it’s created for short-term traders who can handle the risks connected with rather inconstant markets. (full article)

CCI was developed to determine overbought and oversold levels. The CCI does this by measuring the relation between price and a moving average (MA), or, more specifically, normal deviations from that average.

Since its introduction, the indicator has grown in popularity and is now a very common tool for traders in identifying cyclical trends not only in commodities, but also equities and currencies. The CCI can be adjusted to the timeframe of the market traded on by changing the averaging period.

The CCI is calculated as the difference between the typical price of a commodity and its simple moving average, divided by the mean deviation of the typical price. The index is usually scaled by a factor of 1/0.015 to provide more readable numbers.

Related Articles:

Investopedia:
The Commodity Channel Index (CCI) is an oscillator originally developed by Donald Lambert and featured in his book “Commodities Channel Index: Tools for Trading Cyclical Trends”. (full article)

Wikipedia:
The Commodity Channel Index (CCI) is an oscillator originally introduced by Donald Lambert in an article published in the October 1980 issue of Commodities magazine (now known as Futures magazine). (full article)

Metaquotes:
Commodity Channel Index Technical Indicator (CCI) measures the deviation of the commodity price from its average statistical price. (full article)

Chaos Gator is the most used method of explaining a moving average is the comparison of the dependence of the security’s price on moving averages of the security’s price, and vice versa, or relationship between a few moving averages.

The Gator Oscillator is displayed as two histograms:
- The histogram above zero shows the distance between the blue and the red lines (between the Alligator’s jaw and teeth);
- The histogram below zero shows the distance between the red and the green lines (between the Alligator’s teeth and lips).

All the bars of each histogram are either green or red:
- Histogram bar is red if it is lower than the preceding one;
- Histogram bar is green if it is higher than the preceding one.

The Gator Oscillator clearly shows convergence and intertwining of the Balance Lines when the Alligator is asleep or awake thus helps identify a trend.

Related Articles

From Alpari-idc:
The Gator Oscillator shows the degree of convergence / divergence of the Balance Lines. (full article)

From Forexrealm:
Bill Williams named this indicator in his book “New Trading Dimensions”. The book touches upon chaos theory, and lets readers debate if the so-called supercomputers were used in developing different trading methods. (full article)

Chande Momentum Oscillator (CMO) created by calculating the difference between the sum of all recent gains and the sum of all recent losses and then dividing the result by the sum of all price movement over the period.

The Chande Momentum indicator is a momentum oscillator. This oscillator can be used as a trading signal in two various ways.

The first method is to purchase when the oscillator crosses above its MA line and to sell when the oscillator crosses below its MA line. The second is to measure overbought or oversold levels for a certain currency.

This oscillator is similar to other momentum indicators such as the Relative Strength Index and the Stochastic Oscillator because it is range bounded (+100 and -100).

Related Articles

From Investopedia:
A technical momentum indicator invented by the technical analyst Tushar Chande. It is created by calculating the difference between the sum of all recent gains and the sum of all recent losses and then dividing the result by the sum of all price movement over the period. (full article)

From Forexrealm:
The Chande Momentum indicator is a momentum oscillator. This oscillator can be used as a trading signal in two various ways. (full article)

Chaikin quantifies volatility as a widening of the range between the high and the low price of a security. This does not take trading gaps into account as Average True Range does.

According to Chaikin’s interpretation, a growth of volume indicator in a relatively short space of time means that the prices approach their minimum (like when the securities are sold in panic), while a decrease of volatility in a longer period of time indicates that the prices are on the peak (for example, in the conditions of a mature bull market).

It’s recommended using Moving Averages and Envelopes as a confirmation of Chaikin’s indicator signals.

• A peak of indicator’s reading appears when market prices rollaway from the new summit and the market turns flat.
• A flat market resembles low volatility. An exit from the side movement (from a flat) is not accompanied by a significant increase of volatility.
• Volatility grows along with the increase in price level over the previous maximum.
• A rise of Chaikin’s indicator level continues till a new price peak is reached.
• A rapid decrease of volatility means that the movement is slowing down and that a back-roll is possible.

Related Articles

From MQL4
Chaikin’s volatility indicator calculates the spread between the maximum and minimum prices. It judges the value of volatility basing on the amplitude between the maximum and the minimum. Unlike Average True Range, Chaikin’s indicator doesn’t take gaps into account. (full article)

From Traderslog
The Chaikin Volatility Indicator uses the percent change of two moving averages of a volume weighted accumulation-distribution line to determine the volatility of a financial data series. (full article)

From Forexrealm
With the help of the Volatility Chaikin’s indicator you can measure the distinction between high and low prices which clearly demonstrates peaks or falls of the Forex market. (full article)

The volume indicator of accumulation / distribution by Marc Chaikin technically analyses both market indexes and separate shares, and should also comprise knowledge of tenders’ volume to help analysts to get the right vision of the essence of every particular market.

Chaikin Oscillator compares the day’s closing price to the intraday high and intraday low through this calculation: volume x [(close-low)- (high-close)] / (high - low). The figure is calculated daily and then a running total is kept. The oscillator is created by comparing the three-day moving average to the ten-day moving average.

According to IAV, the prices’ noticeable short-term and intermediate rises and falls very often turn out to be quite true. There’s a precise technical signal that predicts the upcoming change of the market prices. It usually happens when the formation of a price extremum goes together with a discrepancy of IAV line. According to this rule, the so-called concept of balance volume was elaborated and improved by another researcher, Larry Williams.

In the early seventies it was quite impossible to make calculations according to Williams’s formula without phoning the broker every day because daily newspapers have stopped printing data on the share’s open price. That’s why Chaikin created Oscillator and replaced the open price in Williams’s formula by the average day.

So if there is a reliable instrument of the market analysis and a tool of opportune defining buy and sell signals - it’s Chaikin’s Oscillator.

Related Articles

From Investopedia
An oscillator created by subtracting a 10-day EMA from a 3-day EMA of the accumulation/distribution line. (full article)

From Forexrealm
Chaikin’s Oscillator, is called after its developer Marc Chaikin and is a difference of moving averages of the accumulation/distribution indicator. (full article)

From Investorwords
A technical analysis tool that compares the day’s closing price to the intraday high and intraday low. (full article)

Calculations are made for each bar with an average price greater than the previous bar and for each bar with an average price less than the previous bar. These values are then indexed to calculate and plot the money flow.

The use of both price and volume provides a different perspective from price or volume alone. The money flow indicator tends to show dramatic oscillations and can be useful in identifying overbought and oversold conditions.

If Chaikin Money Flow is less than zero it’s a definite first bearish signal. If the point is below zero it means that a security is experiencing distribution or stays under selling pressure.

The Chaikin Money Flow is based on the supposition that a bullish stock has increasing volume and a rather high close price within its daily range which means strong security. Still there is a weak security if it’s permanently closed with a rather low close price within its high volume and daily range.

Related Articles

From Investopedia
Money flow is an indicator that calculates an indexed value based on price and volume for the number of bars specified in the input Length. (full article)

From Traderslog
Developed by Marc Chaikin, the Chaikin Money Flow is an oscillator derived from daily readings of the Accumulation Distribution Line. It indicates if a stock is undergoing accumulation or distribution. (full article)

From Forexrealm
The Chaikin Money Flow compares sum volume to the closing price and the daily peaks and falls to define the number of issues being purchased and sold of a certain security. (full article)

It is calculated by a 10-day exponential moving average of the number of advancing issues by the number of advancing plus decline. If the indicator rose from below 40% to about 61.5% in this reflects a surge in the market is changing from a bullish to an oversold condition.

Related Articles

From Forexrealm
The Breadth Thrust Indicator, one of basic market momentum indicators, was developed by Dr. Martin Zweig. (full article)

From Traderslog
Developed by Dr. Martin Zweig, the Breadth Thrust Indicator measures market momentum. (full article)