The Klinger volume oscillator is a volume-based technical indicator that compares volume to price to forecast price reversals in the financial markets.
What Is a Klinger Oscillator?
The Klinger oscillator is used to forecast long-term money flow trends while simultaneously identifying short-term variations. Created by Stephen Klinger in 1977, this technical indicator also forecasts price reversals in a financial market by comparing volume to price in great detail. The number of units of an asset/stock/cryptocurrency that are traded per unit of time is referred to as volume.
Klinger Oscillator Trading Strategy
The Klinger oscillator consists of two lines
. The blue line is the KVO line and the green line represents the EMA
average. The 13-period moving average
is the standard signal line for determining whether to purchase and sell. The indicator is based on the notion of volume moving through an asset and how it affects both short-term and long-term price levels
. As with every other technical indicator, the key point is to watch the crossover. In the chart below, notice how the blue line crossed the green line and the price of the asset also fell with it.
Why Is Klinger Oscillator Used?
The Klinger oscillator is used to identify the buying and selling signals through the 13-period moving average
line, which is similar to the MACD indicator
. Traders become bullish when the Klinger oscillator crosses and goes above the signal line and bearish when it falls below it.
What Is the Best Setting for Klinger Oscillator?
Unlike most technical indicators, the Klinger oscillator does not have any specific values attached to its lines. Rather, you can choose the indicator time frame and set it for a period in which you want to trade.
Klinger Oscillator Formula
The formula for the Klinger volume indicator is relatively complicated to other technical indicators, however, traders are not required to understand it. Rather, they should focus on understanding its use. The volume oscillator is generated by deducting the 34-period exponential moving average (EMA) of the volume force from the 55-period exponential moving average of the volume force in the first stage.
Here’s how you can calculate Klinger Oscillator:
- KO= Klinger Oscillator
- VF= Volume Force
- Volume Force =V×[2×((dm/cm)−1)]×T×100
- V= Volume
- T= Trend
- Trend=+1 if (H+L+C)>(H-1 +L-1 +Cv-1)
- Trend= −1 if Above is < or =
- H= High
- L= Low
- C= Close
- dm= H−L
- cm=cm-1 + dm if Trend = Trend-1
- cm=dm-1 + dm if Trend =/= Trend-1
Traders who use the Klinger oscillator can immediately initiate another counter position after closing their initial one in the market, which means that they are always in the market as the open and close signals are identical.
However, the Klinger oscillator is a short-term trading technique that works well mostly on lower time frame charts. This is because when you are in the market for a long period, you collect large volumes, resulting in numerous losses and gains. Here, the end goal is to maintain a better win-to-loss ratio when you close all your positions.
The most popular technique used to increase the accuracy and relevance of the Klinger Oscillator is to combine it with other technical indicators
especially the stochastic oscillator along with price channels, trend lines, or triangles
that confirm the price breakout or breakdowns. It is also advisable to use a bunch of other indicators, like MACD
, Aroon Indicator
, before making a buying or selling decision in the financial markets.