Chaikin Money Flow (CMF) on a Live Bitcoin Chart

What it shows

Its pane holds one line around a zero guide, bounded by −1 and 1. Values near either end are rare because they need every candle to close at its extreme.

How Pravex works it out

1. For each candle, work out where the close sits in the range: ((close − low) − (high − close)) ÷ (high − low). That is 1 for a close at the high and −1 for a close at the low.
2. Multiply that by the candle’s volume. If the high equals the low, or the close equals both, the candle counts as 0.
3. Add up those values over the last Length candles, and add up the volume over the same candles.
4. CMF = sum of the weighted values ÷ sum of volume.

Settings

Setting	Default	What changing it does
Length	20	How many candles go into both sums. A shorter length follows each candle closely; a longer one is slower and steadier.

How traders read it

Zero is the dividing line. Readings above it say volume has tended to arrive with closes in the upper half of the candles. Below it, the lower half. A line that holds one side of zero for days is a sign the pressure has been steady.

The size matters too. A line hovering at 0.02 says very little, while one at 0.25 means most of the volume sat with strong closes. Compare it with the line’s own recent range.

Set it against price, too. Price making a higher high while CMF stays under its earlier peak says the closes are weakening inside the candles.

When it misleads

CMF ignores everything that happens inside a candle except where it ended. A candle that swung wildly and closed in the middle counts as neutral, and a gap between candles is not counted at all, because only the high, low and close of each candle are used. Over a short length one big candle can swing the whole line. With no volume in the bars, both sums are zero and nothing can be drawn.

Questions and answers

What does a positive CMF mean?

Weighted by volume, the last 20 candles have closed more in the upper part of their range than in the lower part. It says where candles closed, not what price will do next.

Why does CMF treat some candles as zero?

When the high equals the low, the range is zero and there is nothing to divide by, so Pravex counts the candle as 0. The same applies if the close equals both the high and the low.

Is a CMF of 0.1 strong?

It depends on the market’s own range. On hourly bitcoin the line spends most of its time between about −0.2 and 0.2 (an example band, check the live chart), so 0.1 is a mild lean. A reading past the line’s recent peaks says more than any fixed number.

How is CMF different from the Accumulation/Distribution line?

Both start from the same close-in-range value times volume. The A/D line keeps adding it up forever, so its level drifts with history; CMF sums it over 20 candles only and divides by the volume, so it stays between −1 and 1 and forgets old candles.

Related: Chaikin Oscillator, Money Flow Index, On Balance Volume, Volume, every indicator.