Description

• Developed by Marc Chaikin, it helps to understand or determine amount of money flowing into and out of the security
• It is built on the premises that stock strength is understood by price closing in comparison to its daily high-low range
• Stock with buying strength will close in upper half of its daily range along with increased volume and with selling strength should close in lower half of daily range with increasing volume
• Indicator oscillates above and below 0 levels

Interpretation

• Indicator crossing zero level from below is a positive breakout for buy signal
• Indicator crossing zero level from above is a negative breakout for sell signal
• It is also widely used along with trend line, support/resistance breakouts to confirm signals

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• Qty Line
• Bars

Returns/Output

CMF values of stock for the specified period

Formula

CMF = ∑n ( CLV * Volume ) / ∑n Volume
where , CLV = [(Close – Low) – (High – Close)]/ (High – Low)