The A/D Line and Chaikin Money Flow (CMF)

Where it closes matters more than whether it rose

CLV looks at where the close lands between the day's high and low: closing at the high is +1, at the low −1. Opening high, getting sold all day and closing low means sellers were stronger intraday.

A/D: credit by where it closes

OBV only asks whether price closed up or down from yesterday and records the whole day's volume; the A/D line multiplies volume by CLV and adds that up. When the two lines point in opposite directions, it's worth a second look.

CMF: who's had the upper hand over the last 20 bars

CMF adds up "CLV × volume" over the last N bars and divides by total volume, landing between −1 and +1. Staying above 0 leans to buyers, below to sellers. It's supporting evidence, not a buy or sell order.

Key takeaways

• CLV = ((close − low) − (high − close)) ÷ (high − low), ranging from −1 to +1: a close at the high is +1, at the low −1.
• The A/D line adds up "CLV × volume" candle by candle, while OBV adds the full volume based on whether the close was up or down, so the two can point opposite ways.
• CMF = the sum of "CLV × volume" over the last N candles (usually 20) ÷ the sum of volume. Staying above 0 leans toward buyers; below, toward sellers.
• If price rises while the A/D line keeps sliding, distribution may be underway. Divergences like this are only warnings and still need price to confirm.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

1. In "Opens high, closes low," move the cursor to a candle in the purple stretch: how much did OBV and A/D each record for this bar? Why is one positive and the other negative?
2. Play to bar 74: in the purple stretch, which way do the OBV and A/D lines each go? What does price do afterwards?
3. Switch to "Opens low, closes high": in the purple stretch, are the CMF bars above or below the zero line? Did price rise or fall during that time?
4. Switch to "Volume confirms price" and change the CMF period from 20 to 10: do the CMF bars get jumpier or steadier?

Quiz and explanations

1. A candle has a high of $12, a low of $10 and a close of $12. What's the CLV?

Answer: +1.It closed at the high, so CLV = +1.

2. Today closed higher than yesterday, but after opening high it slid all day and closed near the day's low. What happens to OBV and the A/D line today?

Answer: OBV rises, A/D falls.OBV only checks that it's up from yesterday and adds the full volume. A/D looks at where it closed: near the low, CLV is negative, so it falls.

3. CMF(20) stays around +0.2 for several weeks. What does that mean?

Answer: Most volume came on candles that closed near their highs, so buyers have the edge.A positive CMF means money flow leans toward buyers overall.

Terms in this lesson

• A/D line (Accumulation / Distribution Line): The accumulation/distribution line adds up CLV × volume candle by candle; the closer the close is to the high, the more volume counts as buying, so it reads strength within each candle, not just up or down.
• CLV (Close Location Value): Close location value: where the close sits between the candle's high and low, from −1 to +1; closing at the high is +1, at the low −1, in the middle 0.
• CMF (Chaikin Money Flow): Chaikin Money Flow: the sum of CLV × volume over the last N candles (often 20) ÷ total volume, from −1 to +1; staying above 0 means buyers are in control.
• OBV (On-Balance Volume): A running total that adds volume on up days and subtracts it on down days, showing where money is flowing.