Chaikin Money Flow (CMF)

Chaikin Money Flow (CMF) is a volume indicator developed by Marc Chaikin. The indicator is used to determine if a market is in an accumulation or distribution phase. The indicator is based on previous closing prices compared to the high/low of the session. The market is strong if the CMF indicator is above zero, the market closed near the high point. The Market is weak if the CMF indicator is below zero, the mareket closed near the low point.

The indicator is typically used with a 21 day timeframe. The indicator should not be used alone, it should be paired with other non-volume indicators.

Calculation:
CMF = Sum {[(Close – Low) – (High – Close)] / (High – Low) x Period’s volume} / Sum (volume)

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Tags: Accumulating, Calculation, Chaikin, Distributing