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Chaikin Volatility

CHV · module 29 of 33 · volatility

The rate of change of the smoothed high–low spread.

Chaikin Volatility on a chart
EUR/USD · 1h · demo data
Volatility fallingVolatility risingVolatility risingVolatility risingVolatility risingVolatility risingVolatility fallingVolatility risingVolatility fallingVolatility risingVolatility falling1.09051.0791Chaikin Volatility (10, 10) · %0
  • CV
  • ▲/▼ where the rule triggers

Rate of change of the average high-low range. Sharp rises often come near panic lows or breakouts.

How to apply it

  1. 1. Add it. Start with 10/10 on 15m (Intraday).
  2. 2. Read the market first. Sharp rises mark volatility expansion, which often accompanies the start of a directional move.
  3. 3. Adjust for ranges. Persistently negative readings indicate contracting ranges — a compression signal.
  4. 4. Manage the trade. Place the stop at 1.5 × ATR and the target at 3.5 × ATR, and only act when the chart above shows the trigger.

How it is calculated

CHV = 100 × (EMA(H−L, 10) − EMA(H−L, 10) n candles ago) ÷ EMA(H−L, 10) n candles ago.

Inputs

  • · EMA period (10)
  • · ROC period (10)

Reading it correctly

In a trend

Sharp rises mark volatility expansion, which often accompanies the start of a directional move.

In a range

Persistently negative readings indicate contracting ranges — a compression signal.

Settings by style

StyleSuggested values
Intraday10/10 on 15m
Swing10/10 on 4h

These are conventional starting points, not optimised values. Test any change on your own pair and timeframe before relying on it.

Worked example

EMA of the high–low spread rises from 0.0010 to 0.0014: CHV = 100 × 0.0004/0.0010 = +40%. Candle ranges are expanding sharply relative to ten candles ago.

When it failed

CHV spiked +120% during a single news candle on GBP/USD. Treated as a breakout confirmation it produced an entry at the spike high; price returned to the pre-news level within 15 minutes.

Limitations

  • Directionless, and a single wide candle can dominate the reading.
  • Ignores gaps because it uses high minus low rather than true range.
  • Two parameters with no widely tested convention.

Works well alongside

  • · ATR
  • · Bollinger BandWidth
  • · ADX / DMI

Redundant with

  • · ATR
  • · Standard deviation
  • · Bollinger BandWidth

Stacking these produces agreement by construction, which is not confirmation.

Practice exercise

Plot CHV and ATR(14) on 15m EUR/USD across a news release. Note which reacts faster and which is more distorted by the spike.

Check your understanding

1. Chaikin Volatility measures:
  • · The level of volatility
  • ✓ The rate of change of the smoothed high–low spread
  • · Volume pressure
  • · Trend direction

It is a rate-of-change calculation applied to a smoothed range, so it measures acceleration rather than level.

2. Unlike ATR, CHV ignores:
  • · The high
  • ✓ Gaps between candles
  • · The low
  • · Smoothing

It uses high minus low, not true range, so a gap between one candle's close and the next candle's open is invisible to it.