Klinger oscillator: Analyzing the financial market using the Klinger oscillator indicator
Klinger oscillator: Analyzing the financial market using the Klinger oscillator indicator

By quintomudigo | Teacher forex school | 3 weeks ago

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Klinger oscillator is a volume kind of oscillator indicator.

Being a volume oscillator indicator, Klinger oscillator was created by Stephen Klinger with the main objective of helping traders to know the direction of the market, that is, whether the market is in an upward or downward movement.Just like other oscillator indicator, Klinger oscillator also has an oscillation at point 0.

According to Stephen Klinger, Klinger oscillator works on the basis of crossover and divergence as well as centerline.

Just like in other crossover indicators, Klinger oscillator also has two crossover lines,The klinger oscillator(KO) mostly indicated by the blue line and the signal line mostly indicated by the green line.

According to Stephen Klinger, Klinger oscillator is based on high price,low price ,close price and volume.When these four are being combined,they will form what is called the volume force(VF).The volume force will then become an oscillator when the fast EMA of volume force is subtracted to the slow EMA of volume force .

 The values of klinger oscillator is gotten using two time periods,34 period (FAST EMA)and 55 period(SLOW EMA) as follows;

 

Klinger oscillator(KO) = 34 Period EMA of volume force(VF) - 55 Period EMA of volume force(VF)

Furthermore, the concept of klinger oscillator indicator is further explained from below;

 

CONCEPT OF OVERBOUGHT AND OVERSOLD

 

Since klinger oscillator is a volume based oscillator with an oscillation at point 0 and with two crossover lines,it therefore follows that when the two lines crosses above 0,that will be an indication that the market is bullish thus the trader should be trading upwards.On the other hand,when the two lines crosses below 0,that will be an indication of a bearish market thus the trader should be trading downwards.Based on crossover,the klinger oscillator has two curve lines,the klinger oscillator(KO which is blue in color) and the signal line which is green in color.The klinger oscillator will be crossing above or below the signal line.When the klinger oscillator crosses above the signal line at below 0,that will be an indication of an oversold market thus signaling the trader to close any sell position and enter a buy position since the market will start moving upwards.On the other hand,when the klinger oscillator crosses below the signal line at above 0,that will be an indication of an overbought market thus signaling the trader to close any buy position and enter a sell position since the market will start moving downwards.This is indicated as from the candle sticks chart below;

 

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From the candle sticks chart above,there are four points,A,B,C and D. Point A represents an oversold market while point B represents an overbought market.Point C represents the klinger oscillator while point D represents the signal line.At point A,the klinger oscillator has crossed above the signal line at below 0 thus and indication of an oversold market at that point.This will signal the trader to close any sell position and open a buy position since the market is starting to move upwards.On the other hand,at point B,the klinger oscillator has crossed below the signal line at above 0 thus an indication of an overbought market at that point.This will signal the trader to close any buy position and open a sell position since the market is starting to move downwards.

 

CONCEPT OF DIVERGENCE

Based on divergence,when the market is trending upwards when the klinger oscillator is trending downwards,the market will reverse and start trending downwards in the same direction as the klinger oscillator.On the other hand,when the market is trending downwards while the klinger oscillator is trending upwards,the market will reverse and start trending upwards in the same direction as the klinger oscillator. This is indicated as from the candlesticks chart below

 

From the candlesticks chart above, there are two points, point A and B. At point A the market was trending downwards while the klinger oscillator and the signal line were trending upwards. The market then reverse and starts moving upward in the same direction as the klinger oscillator and signal line. This signals the trader to be trading in an upward market direction along point A. On the other hand, at point B, the market was trending upwards while the klinger oscillator and the signal line were trending downwards. The market then reverse and starts moving downward in the same direction as the klinger oscillator and the signal line. This signals the trader to be trading in a downward market direction at point B.

 


Recommendation:If you are a day trader just use 1 min,5 min ,15 min and 30 min timeframe while if you are a swing trader just use 1 hour and above timeframe if you want klinger oscillator to work well for you

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quintomudigo
quintomudigo

Trader, Blockchain Technologist and Contentpreneur. Also founder and CEO @ Teacher Forex School.


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