The Klinger Oscillator is a volume-based indicator developed by Stephan Klinger. This indicator is used to identify the longer-term trend of money flow in any particular security. However, it remains sensitive to detect the short-term trend. The calculation of this indicator is quite complex, as it is created by looking at the difference between the two moving averages of force volume involving different timeframes.
The idea behind this indicator is to identify how the volume is flowing through an asset and how is it impacting the short term and long term price direction. This indicator consists of two lines which fluctuate above and below the zero-line.
Using the Klinger Oscillator, traders can look for divergence in the market to identify price reversals. They can also use additional tools such as trend lines, other indicators, and candlestick patterns; or can even use it in conjunction with chart patterns such as channels, triangles, head and shoulder patterns, etc. as a technique to confirm a breakdown or breakout.
By default, the 13 period moving average is the signal line used to identify buy or sell signals. However, it fails to identify accurate buy/sell signals when the market is ranging.
An example of a Klinger Oscillator indicator is shown below.
Installing Klinger Oscillator To MT4 (Step-by-step procedure)
By default, the Klinger Oscillator is not available on the MT4 Terminal. However, one can download it from the internet.
Follow the link below to download the Indicator.
After downloading the zip file from the above link, extract the file and navigate to the MT4 directory/MQL4 as shown in the below image.
Then, click on the ‘Indicators’ folder and paste the file there.
Now, restart your MT4 Terminal.
Finally, to apply the indicator on your MT4 terminal, follow the steps as shown below.
Insert > Indicator > Custom > Klinger Indicator (KVO)
You can see in the image below we have applied the Indicator on a EURAUD chart.
Klinger Oscillator – Trading Strategies
Klinger Oscillator + True Strength Index Indicator
In this strategy, we have paired the Klinger Oscillator with the TSI Indicator. Both these indicators are oscillators.
TSI is the short-form for True Strength Index. It is a momentum indicator and is based on the double smoothing of price changes. This Indicator fluctuates between positive and negative territory. The centre line of this study defines the overall bias. This Indicator is useful for determining oversold and overbought conditions and for cautioning the weakness of a trend through divergence. It also indicates the direction of the future trend via the centre line crossovers. When the TSI is positive, it shows a strong bullish momentum, and when the TSI is negative, it means there is a bearish momentum in the market.
According to this strategy, when both the indicators give a crossover below the zero-line, it indicates a buy signal.
From the below chart, we can see that the downtrend was struggling and was unable to make brand new lower lows as well. Later, the Klinger oscillator and the TSI indicator gave us a crossover below the zero-line, indicating that the market is ready to reverse. Therefore, we can prepare to go long at this point.
When the Klinger indicator gives a crossover above the zero-line, we can close the position. And, as far as the stop loss is concerned, when the volatility of the market is low, we can keep the stop loss below the recent low, and when the market volatility is pretty high, we can keep it a little spacious.
In the below example, the market was in an overall downtrend in the beginning. During the pullback phase, the crossover happened on the Klinger and TSI indicator, indicating a sell signal. Hence, we can prepare to go short.
Also, as the downtrend is pretty strong, we can expect the market to make brand new lows.
Klinger Oscillator + Moving Average indicator
In this strategy, we pair the Klinger indicator with the Simple moving average to identify trading signals.
The SMA is a leading indicator in the forex market. It is the most powerful technical analysis tool used by traders. This indicator is often used to identify the overall trend direction of the market and to obtain buy/sell signals. Comprehending the SMA indicator is simple and straightforward. If the SMA is pointing upwards, then the trend is up; and if it is pointing downwards, it means that the trend is down. There are several moving averages in the market, but in this strategy, we shall be using the default settings.
The strategy is applicable when the Klinger indicator gives a crossover below the zero-line and moving average also goes below the price action. When this happens, it indicates a bullish sentiment in the market.
In the below USDJPY forex chart, after a strong downtrend, the market turned sideways for some time. Then, the moving average went below the price action and also the crossover happened on the Klinger Oscillator, indicating a buy signal.
Always close the trade when the moving average goes above the price action. By this, you can ride the moves for deeper targets. As you can see in the image below, this trade gives us a 100 pip profit and the moving average is still below the price action. This is an indication that the buyers are still controlling the market.
This is our proven strategy which easily helps you to make 4to5 R in every trade.
As you can see in the image below of the USDJPY forex chart, the market turned sideways, and the moving average went below the price action. Also, the crossover happened on the Klinger oscillator, indicating a sell signal.
Always put a stop-loss order above the recent candles. Close the trade when Moving Average goes below the price action. And, if you are going with the trend, which is super strong, then you expect a brand new low as well.
Klinger is a trend reversal indicator which relies on the concept of volume force, a unique term to this particular indicator. This indicator consists of a signal line which is generally used to confirm the entries and exits. When the crossover happens below the zero, it indicates a buy signal. Similarly, when the crossover occurs above the zero-line, it shows a sell signal. Chartists use the divergence tool to identify the upcoming reversals in the market as well. Ultimately, the Klinger indicator should be used as a confirmation tool in conjunction with the other Indicator to determine trading signals. Hope you had a good read. Happy Trading!