Chaikin Money Flow (CMF)
Web3 / technical analysis
Chaikin Money Flow is a volume-weighted momentum indicator that measures the accumulation and distribution of money flowing into or out of a security over a specified period, typically 20 days. It combines price location within the day's range with trading volume to assess buying or selling pressure. CMF values range from -1 to +1, where positive values indicate net accumulation (bullish pressure) and negative values suggest net distribution (bearish pressure). The indicator helps traders identify whether volume is supporting price movements or diverging from them, making it valuable for confirming trends and spotting potential reversals in crypto markets. Example: Traders monitoring Bitcoin's daily charts frequently use CMF with a 20-period setting to confirm uptrends. When Bitcoin's price rises alongside positive CMF values above +0.25, it suggests strong institutional buying pressure, while price increases paired with negative CMF readings may signal a weakening trend vulnerable to pullbacks. Why it matters for crypto technical analysis: CMF reveals whether volume genuinely supports price movements or if divergences suggest weak hands are selling into strength. This helps crypto traders distinguish between sustainable trends and false breakouts, improving entry and exit timing in volatile markets.
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