Chaikin volatility
Tracks the rate of change of an EMA of the high-low trading range, flagging when the range is expanding (rising volatility) or contracting (falling volatility).
What the numbers mean
The first number is the EMA period applied to the high-low range, the second is how far back that smoothed range is compared to. The plot is the percentage change in the average range over that span.
- 10 — the EMA applied to the high-low range
- 10 — how far back that smoothed range is compared to
- Plotted as a percentage change in average range
How it is used
Used to detect volatility regime changes: a sharp rise suggests a market approaching a top, where trading gets frantic, and a slow decline is associated with the quiet consolidation that often precedes a bottom.
- A sharp rise → frantic trading, often near a top
- A slow decline → the quiet consolidation that often accompanies a bottom
- Regime changes rather than levels are the signal
How it relates to everything else
It measures the rate of change of range where ATR measures the level of it, and it ignores gaps that ATR includes. Used alongside Bollinger bandwidth it gives a second opinion on whether volatility is genuinely compressing.
- Rate of change of range; ATR gives the level
- Ignores gaps, unlike ATR
- Direction-blind, like every volatility measure
What to watch for
It only measures the range, ignoring gaps, and it gives no direction — a volatility surge accompanies both panics and melt-ups.