What Is Chaikin Money Flow?
Chaikin Money Flow (CMF) is a volume-weighted oscillator that measures the accumulation-distribution flow over a specified period (typically 20 or 21 days). It oscillates between -1 and +1, with positive values indicating buying pressure (accumulation) and negative values indicating selling pressure (distribution).
How Chaikin Money Flow Works
CMF is calculated by dividing the sum of Money Flow Volume (A/D values × volume) over the period by the sum of volume over the period. Unlike the cumulative A/D Line, CMF is bounded and more useful for comparing relative strength of buying and selling pressure across different time windows.
Why It Matters for Traders
CMF divergences from price are powerful signals. When price makes new highs but CMF declines or turns negative, it shows that volume is not supporting the rally — a warning sign of an impending reversal. CMF above zero during a pullback in an uptrend confirms the pullback is a buying opportunity rather than the start of a reversal.
