Chaikin Money Flow (CMF)

Chaikin Money Flow (CMF) is a technical indicator developed by Marc Chaikin that combines price and volume to measure the buying and selling pressure for a security over a specified period (typically 20 or 21 days). The calculation first determines the Close Location Value (CLV) for each period — a number between -1 and +1 that represents where the closing price falls within the day's high-low range. A close at the high produces a CLV of +1, a close at the low produces -1, and a close at the midpoint produces 0. The CLV is then multiplied by volume for each period, and CMF is calculated as the sum of these Money Flow Volumes divided by the total volume over the lookback period. The resulting value oscillates between -1 and +1. Positive CMF values indicate net buying pressure (accumulation), while negative values indicate net selling pressure (distribution). Values above +0.25 suggest strong buying pressure, while values below -0.25 suggest strong selling pressure. Traders use CMF to confirm trend direction: a rising price accompanied by positive CMF confirms bullish sentiment, while rising price with negative CMF warns of potential weakness. CMF is also useful for identifying divergences between price and money flow, which can precede reversals.