The Ichimoku Cloud is a comprehensive forex indicator that provides trend direction, support/resistance, and momentum signals. In this guide, we’ll explore how the Ichimoku Cloud works and how to use it for effective trading strategies.
The Chaikin Volatility Indicator (CVI) is a volatility-measuring tool developed by Marc Chaikin. Unlike traditional volatility indicators, the CVI analyzes changes in the difference between high and low prices over a given period to detect market volatility surges and contractions.
The Chaikin Volatility Indicator formula is:
CVI = [(EMA of High-Low Difference) – (EMA n-periods ago of High-Low Difference)] / (EMA n-periods ago of High-Low Difference) × 100
Where:
The CVI helps traders recognize increased market volatility:
Trading Tip: A sudden spike in CVI may indicate a potential breakout, especially when price nears key support or resistance levels.
Pairing the CVI with a breakout strategy improves trade accuracy:
Pairing CVI with a moving average (e.g., 50 EMA) helps confirm trade setups:
Traders use the CVI to adjust stop-loss placements:
✅ Pros:
❌ Cons:
The Chaikin Volatility Indicator is a powerful tool for tracking volatility changes and identifying potential breakout opportunities. When used alongside trend indicators like moving averages or Bollinger Bands, CVI helps traders make more informed trade decisions.
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