Chaikin Money Flow (CMF) is used to measure buying and selling pressure over a set period of time via the use of money flow calculations.
Money flow is calculated by averaging the high, low, and closing prices, and multiplying by the daily volume. Comparing that result with the number for the previous day tells you whether money flow was positive or negative for the current day.
A move into positive territory indicates buying pressure, while a move into negative territory indicates selling pressure.
Traders use the Chaikin Money Flow to gauge the underlying psychology behind price action. Positive CMF would confirm an uptrend, but negative CMF would call into question the strength behind an uptrend. The reverse holds true for downtrends.<< Back to Glossary Index