Key Points
- Chaikin Money Flow (CMF) blends price and volume to estimate buying and selling pressure over a chosen period.
- CMF indicator crypto: CMF is most useful as confirmation, showing whether volume is supporting the move or fading underneath it.
- CMF above 0 vs below 0 meaning: above zero suggests net buying pressure, below zero suggests net selling pressure, with the zero line acting as the simplest regime split.
- CMF divergence crypto explained: price making a new high or low while CMF fails to confirm can warn pressure is weakening.
- CMF vs OBV difference: OBV is a cumulative line based on up closes and down closes, while CMF weights volume by where price closes inside the candle’s range.
- CMF works best when you read it at key levels and in trend context, not as a standalone signal generator.
- If any terms feel unfamiliar, use the Crypto Glossary for quick definitions, then return to this lesson.
Quick Answer
Chaikin Money Flow (CMF) is a volume indicator that estimates buying and selling pressure by combining volume with where price closes inside each candle’s range. In crypto, CMF is commonly read using the zero line. CMF above zero suggests net buying pressure, while CMF below zero suggests net selling pressure. CMF divergence happens when price pushes to a new high or low but CMF does not confirm, which can warn that participation is weakening. CMF is most effective as confirmation alongside trend direction and key support and resistance levels.
Where This Lesson Fits
Lesson 36 covered the Relative Vigor Index and how closing behaviour can confirm momentum. Lesson 37 adds CMF, which blends price location inside the candle with volume, giving you a cleaner read on whether buyers or sellers are actually pushing the move.
This lesson is part of the Technical Analysis for Beginners series. For the full lesson map and all supporting guides, visit the Technical Analysis for Beginners Hub.
What Chaikin Money Flow Measures
CMF tries to answer a blunt question.
Are candles closing strong with real volume behind them… or closing weak with real volume behind them?
It does this by weighting volume based on the close location inside the candle’s high to low range.
Mark:
- closes near the high suggest accumulation style pressure
- closes near the low suggest distribution style pressure
- bigger volume makes that close matter more
This is why CMF can sometimes “tell on” a move that looks fine on price alone.
CMF Above 0 Vs Below 0 Meaning
The cleanest CMF read is the zero line.
CMF above 0 vs below 0 meaning:
- above zero suggests net buying pressure across the lookback window
- below zero suggests net selling pressure across the lookback window
- repeated flips around zero often show a choppy regime where conviction is weak
Do not treat a single tick above or below zero as truth. Look for sustained behaviour and slope.
How To Use CMF In Crypto
Use CMF as confirmation, not command.
Step One: Start With Context And Levels
CMF is most useful when price is at a decision zone.
That reaction can come from:
- a breakout attempt at resistance
- a reclaim of a key level
- a rejection from a major zone
- a range boundary test
If price is mid-range, CMF will often just wobble and tempt you into over-reading it.
Step Two: Use CMF For Trend Confirmation
In a healthy trend, CMF often stays on the “right” side of zero.
A practical read is:
- uptrend conditions often show CMF holding above zero more often than not
- downtrend conditions often show CMF holding below zero more often than not
- if price is trending but CMF is not supporting, treat it as a caution flag
This is not about perfection. It is about pressure aligning with price.
Step Three: Use CMF For Breakout Quality
Breakouts fail a lot in crypto.
CMF can help you judge whether the breakout has real pressure behind it.
Mark:
- breakout attempts that happen with CMF rising and staying above zero can look healthier
- breakout attempts where CMF is flat or falling can be more suspect
- reclaim attempts that cannot pull CMF back above zero can be fragile
You still wait for price behaviour and retests to confirm. CMF is the supporting evidence.
CMF Divergence Crypto Explained
Divergence is when price and CMF disagree.
Common CMF divergence examples include:
- price makes a higher high, CMF makes a lower high
- price makes a lower low, CMF makes a higher low
Treat divergence as an early warning, not a guarantee.
That reaction can come from:
- late-stage pushes where price extends but pressure does not
- hidden distribution where closes weaken on meaningful volume
- short covering or thin liquidity moves that look stronger than they are
If divergence shows up, the next step is always the same: wait for price confirmation at levels.
CMF Vs OBV Difference
Both are volume-based indicators, but they measure pressure differently.
CMF vs OBV difference:
- OBV adds volume on up closes and subtracts on down closes, creating a cumulative line
- CMF weights volume by where the candle closes inside its range, then averages pressure over a window
- OBV is excellent for longer trend confirmation and broad divergence reads
- CMF can be more sensitive to closing strength and pressure shifts near levels
You do not need both on the same chart unless each one changes your decision.
Common Traps To Avoid
- treating a single zero line cross as a full regime change
- using CMF without levels and trend context
- forcing divergence calls in sideways chop
- ignoring wicks and close location, which is what CMF is built on
- stacking CMF with too many overlapping indicators until nothing is clear
If you keep CMF as confirmation, it stays clean and useful.
Mini FAQs
What is Chaikin Money Flow CMF?
It is a volume indicator that estimates buying and selling pressure by combining volume with where price closes inside each candle’s range.
What does CMF above 0 vs below 0 mean?
Above zero suggests net buying pressure and below zero suggests net selling pressure over the lookback period.
How do you use CMF indicator in crypto?
Use CMF as confirmation at key levels, checking whether pressure supports the price move and whether CMF holds on the right side of the zero line.
What is CMF divergence in crypto?
CMF divergence is when price makes a new high or low but CMF fails to confirm, which can warn that pressure is weakening.
What is CMF vs OBV difference?
OBV is cumulative volume based on up and down closes. CMF weights volume by closing strength inside the candle range and averages pressure over a window.
Is CMF good for beginners?
Yes, because it simplifies the pressure question into a single line and zero line read, as long as it is used with levels and context.
Next Lesson
In this lesson you learned what Chaikin Money Flow measures, what CMF above or below zero means, how CMF can confirm trends and breakouts, and how CMF divergence can warn when pressure is weakening.
Next, Lesson 38 covers Williams Percent R, an overbought and oversold momentum tool that helps you spot stretched conditions and reversals more cleanly.
For the full lesson map and all supporting guides, visit the Technical Analysis for Beginners Hub.
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Pressure first. Then the chart.
Legal And Risk Notice
This content is for education and information only and should not be considered financial, legal, or tax advice. Crypto assets are volatile and high risk. You are responsible for your own research and decisions, and you should consider seeking independent professional advice where appropriate.
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