What is Chaikin Money Flow (CMF)?
CMF is a technical indicator based on volume and comparing buyers and seller activity. The appeal of CMF is its simplicity it is range from 1 to -1 with a 0 lines as the point defining which side is in control.
To calculate CMF
Step 1
Calculate the multi player for each of the 20 sessions [(close-low)-(high-close)]/(high-low)
Step 2
Multiply the result by the sessions volume
Multiplayer*volume for the session=money flow volume
Step 3
Add the totals for all 20 periods
Money flow volume*20 periods -20 period volume
Step 4
Divide by 22 to find the average
20-period volume/20=CMF
the calculation can be chosen as a technical selection in developing price charts with cmf. The value of this indicator is that is often reflects changes in momentum before price moves and confirms what candlestick formation show. The combined analysis of candlestick indicators and cmf provided a more reliable set of timing signals.
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