An array where the first term in the high in the latest trading period and the second term is the high in the previous trading periods and so on... Until the last term which is the highest market price during the first period which is used in the evaluation of the CMF indicator.
low
An array where the first term in the low in the latest trading period and the second term is the low in the previous trading periods and so on... Until the last term which is the lowest market price during the first period which is used in the evaluation of the CMF indicator.
closing
An array where the first term is the closing price in the latest trading period and the second term is the closing price in the previous trading periods and so on... Until the last term which is the closing price during the first period which is used in the evaluation of the CMF indicator.
volume
An array where the first term in the volume in the securities latest trading period and the second term is the securities volume in the previous trading periods and so on... Until the last term which is the securities volume during the first period which is used in the evaluation of the CMF indicator.
Return Value
Double value equal to the Chaikin Money Flow (CMF) for the latest trading period.
Remarks
The CMF offers a
volume weighted indicator on the following two principles:
The nearer the close is to the high the more accumulation is taking place.
The nearer the close is to the low the more distribution is taking place.
Interpretation
A sell signal is generated in positive over brought territory when higher highs diverge into a lower
high and the indicator continues to decrease. Conversely, a buy signal in generated in negative
oversold territory when lower lows diverge into a high low and the indicator continues to increase.
The CMF indicator can be used as a confirmation signal after a breakout of a trading range. When
a market breaks higher then the breakout is confirmed if the CMF moves into positive territory
and continues to get stronger. Conversely, if the market down after a trading range then the breakout
if confirmed if the CMF move into negative territory and continues to weaken.
Evaluation
The CMF indicator is evaluated for the following steps:
Evaluate the Volume Weighted Accumulation/Distribution over each of the days within the
period considered for the calculation. The Volume Weighted Accumulation/Distribution on each
day is given by: