CMF (Chaikin Money Flow) explained

Volume

What CMF measures

CMF measures the amount of money flowing into or out of a security over a period (default 20 days). It combines price and volume data to show whether institutional money is accumulating or distributing. Values range from -1 to +1, with positive values indicating accumulation and negative values indicating distribution.

How CMF readings are interpreted

CMF above 0 indicates more volume is being associated with price closing in the upper half of its daily range (accumulation). Below 0 indicates distribution. Values above +0.25 indicate strong accumulation. Values below -0.25 indicate strong distribution. The zero-line crossover is a key signal.

Conventional CMF levels

Above +0.25: Strong accumulation — bullish
+0.05 to +0.25: Mild accumulation — cautiously bullish
-0.05 to +0.05: Neutral money flow — no clear direction
Below -0.25: Strong distribution — bearish
Zero line cross: change in money flow direction

Where CMF works, and where it does not

Particularly effective for identifying the health of a price move — is it backed by money flow? Works best for liquid large-cap stocks and index ETFs with reliable volume data. Less reliable for crypto and thin markets. Most useful on daily and weekly charts.

Indicators commonly read alongside CMF

OBV: Both CMF and OBV confirming = very strong conviction signal
RSI: Price pullback + RSI oversold + CMF positive = high-quality buying opportunity
Moving Averages: CMF positive while price is above 50 EMA = strong uptrend confirmation

Known limitations of CMF

CMF can stay negative even as price rises in a low-volume drift — doesn't mean the move is fake, just low conviction
Short-term CMF (5-10 period) is too noisy; 20-period is standard minimum
Comparing CMF across different assets is meaningless without normalizing for market cap

CMF in practice

CMF is often used as a confirmation layer — a strong price configuration alongside positive CMF is treated as agreement
A bearish premise is conventionally regarded as invalidated once CMF turns positive
Divergence, where price makes a new low but CMF a higher low, is read as accumulation
Weekly CMF is generally considered more reliable than daily for longer-horizon direction

Other volume indicators

VWAP — Volume Weighted Average Price
Anchored VWAP
Elder Force Index
Price Volume Trend

Testing ideas built on CMF

A reading of CMF can be written as an exact rule and checked against historical data — as a full strategy with entries, exits and costs, or as a single condition and what followed it:

How to backtest a trading strategy without code
Event analysis: what follows a market event

Plot it yourself. Add this indicator to a chart, change every parameter and watch the line move, then backtest how the rule would have behaved on historical data — free on the S&P 500 ETF, no card.

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This is reference material, not advice. It describes what each indicator measures and how its readings are conventionally interpreted. Nothing here is a recommendation to buy or sell anything, and no indicator predicts future prices. GU Analyser is an analytical tool — no money is ever traded here.