Chaikin Money Flow Indicator was developed by Marc Chaikin. Chaikin Money Flow measures the amount of Money Flow Volume over a specific period. Money Flow Volume forms the basis for the Accumulation Distribution Line. Instead of a cumulative total of Money Flow Volume, Chaikin Money Flow simply sums Money Flow Volume for a specific look-back period, typically 20 or 21 days.

Money Flow Multiplier = [(Close - Low) - (High - Close)] /(High - Low)
Money Flow Volume = Money Flow Multiplier x Volume for the Period 20-period CMF = 20-period Sum of Money Flow Volume / 20 period Sum of Volume

Chaikin Money Flow Divergence

Divergence can show up in the indicator when the CMF indicator makes a higher high, while the price action makes a lower low. This implies that there is less selling pressure pushing the security lower, thus a bounce is in order.

Example 1 - GBPAUD Time Frame: M30


  

Example 2 - GBPCAD Time Frame M30

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