The Klinger oscillator was developed by Stephen J. Klinger. The sense of the Klinger Histogram is to align the Klinger Volume Oscillator reference line to zero. It was developed in assistance to short- and long-term analysis. The Klinger oscillator estimates volume-based money flow directions. There are three types of information that Klinger Oscillator deals with :
- The range of price varying high and low
- Accumulation or distribution
- Volume
The criteria of movement is price range and volume is a force that affects movement. When the sum of today’s high, low and close exceeds the sum of the previous day it’s considered as accumulation.
When the sum of the day gets lower than yesterday’s one it appears to be a distribution. The trend maintenance is seen when both sums are at the same level. Volume shows buying and selling enforcement. It reflects prolonged price changing within the day as well. The range of the shares amount going through accumulation and distribution processes each day as “volume force” is measured by the Klinger Oscillator. A volume force increase usually attends an uptrend. After that it contracts progressively over the period of late uptrend stages and first downtrend phases. Volume force usually rises gradually after that and it characterizes accumulation process preceding the development of the bottom.
The most dramatic indicator according to Klinger turns up when the difference from the implied price action and KO occurs on new highs or new lows in the area of overbought or oversold. The trend losing momentum and coming to an end can be seen when the stock reaches a new high or low and the KO doesn’t show the same. You should buy when the Klinger Oscillator takes unusually low values below zero then goes up over the trigger line during the period of price being in an uptrend, that means price is higher than 89-day exponential moving average. You should sell when the Klinger Oscillator takes extremely high values and then goes lower through the trigger line during a downtrend that means the price which is lower than an 89-day exponential moving average.