when an asset is in an overall downtrend traders could sell or short sell when the klinger oscillator moves below the signal line from above klinger noted this was especially noteworthy when the indicator had seen an uncharacteristic spike above zero 
the zero line is also used by some traders to mark the transition from an uptrend to downtrend or vice versa while such signals won t always agree with price movements a move above zero helps confirm a rising price while a drop below zero helps confirm a falling price the klinger oscillator also uses divergence to identify when the indicator s inputs are not confirming the direction of the price move it s a bullish sign when the value of the indicator is heading upward while the price of the security continues to fall it is a bearish signal when the price is rising but the indicator is falling divergence can be coupled with signal line crossovers to generate trades for example if a bearish divergence forms a sell or short sell could be initiated the next time the klinger crosses below the signal line klinger oscillator vs on balance volumethe klinger oscillator uses price and volume to create two emas the indicator then shows the difference between these two emas a signal line is then added to provide additional trade signals on balance volume is simpler in that it is a running total of positive or negative volume positive volume is added to the running total if the current close is above the prior close or volume is subtracted from the running total if the current close is below the prior close klinger oscillator limitationscrossovers and divergence the two main functions of the oscillator are prone to providing many false signals signal line crossovers are so frequent that it is hard to filter out which ones are worth trading and which ones aren t zero line crossovers also have issues as the indicator may criss cross the zero line multiple times before moving in a sustained direction or the indicator may fail to move with the price resulting in a missed trading opportunity divergence can be useful but often occurs too early resulting in the trader missing a large chunk of the trend or the divergence fails to result in a price reversal at all also divergence is not present at all price reversals so it is not a reliable tool for spotting all possible price reversals use the klinger oscillator only in conjunction with other technical indicators or price action analysis 