Close Location Value (CLV)
What Is Close Location Value (CLV)?
Close location value (CLV) is a measurement utilized in technical analysis to assess where the closing price of a security falls relative to its day's high and low prices.
Close location value values range from +1.0 to - 1.0; a higher positive value indicates the closing price is nearer to the day's high price and a greater negative value indicates that the closing price is nearer to the day's low price.
What Does Close Location Value (CLV) Tell You?
Close location value (CLV) is a technical analysis device that measures the location of the price in relation to the high-low range. It moves in the range from - 1 to +1, or on the other hand, whenever multiplied by 100, in the range from - 100% to +100%.
Close location value (CLV) readings close to 1 (or 100%) indicate that the closing price is near its high and would be considered a bullish sign. CLV readings close to - 1 (or - 100%) reveal that the closing price is near its low and may be considered a bearish sign. CLV readings that are close to zero are considered neutral.
Example of How to Use Close Location Value (CLV)
All alone, the close location value (CLV) isn't considered to be vital by most traders. This indicator is primarily used as a variable in other technical equations.
The CLV features noticeably, for example, in the calculation for the accumulation/distribution (A/D) line (also called the accumulation/distribution indicator [A/D] ):
At the point when not part of another equation, the close location value (CLV) can also be used to affirm or dismiss potential divergences. Keep in mind: It is advisable for any traders utilizing this strategy to involve an intermediate or long-term period for their CLV (because this allows a sufficient historical point of view to forestall overreacting to each fluctuation).
The Difference Between Close Location Value (CLV) and the Accumulation/Distribution Indicator (A/D)
In general, the goal of technical analysis is to predict future price developments; this is accomplished by studying the activity of price and volume in a given security.
The accumulation/distribution indicator (A/D) is one of many different volume indicators. Volume indicators are mathematical formulas that are visually represented in probably the most ordinarily used charting platforms. Volume is in many cases viewed as an indicator of liquidity because stocks or markets with the most volume are the most liquid and considered the best for short-term trading. (All in all, there are many purchasers and venders ready to trade at various prices.)
The accumulation/distribution indicator (A/D) utilizes volume and price to assess whether a stock is being accumulated or distributed and looks to identify divergences between the stock price and the volume flow.
Close location value (CLV) indicates an asset's closing price relative to its intraday high and low. Close location value (CLV) is used in the calculation for the accumulation/distribution (A/D) line.
Limitations of Using Close Location Value (CLV)
One reason why the close location value (CLV) isn't considered helpful all alone is that it is very sensitive to random spikes or drops in prices. This heightened volatility renders it almost futile by and large. (As a reliable high-low relationship metric, stochastics are frequently preferred — instead of close location value (CLV) — because they are less choppy and depend on a different formula to determine price location in the high-low range.
The Formula for Close Location Value (CLV) Is
- CLV is used related to different indicators.
- A positive value means the closing price is closer to the day's high price, whereas a negative value means the closing price is closer to the day's low.
- Close location value (CLV) indicates an asset's closing price relative to its intraday high and low.
- CLV values of +1 would mean the closing price is the same as the day's high, and - 1 the day's low.
How Do You Read an Accumulation/Distribution Line?
The purpose of an accumulation/distribution (A/D) line is to assist with assessing price trends and potentially spot impending reversals.If the price of a security is in a downtrend while the A/D line is in an uptrend, for example, the indicator shows there may be buying pressure; the security's price may reverse to the upside. On the other hand, on the off chance that the price of a security is in an uptrend while the A/D line is in a downtrend, then, at that point, the indicator shows there may be selling pressure (or higher distribution). This warns that the price may be due for a decline.In general, a rising accumulation/distribution (A/D) line affirms a rising price trend, while a falling A/D line affirms a price downtrend.
What Is Accumulation in Technical Analysis?
Traders frequently use volume as a way to assess the significance of changes in a security's price. Volume alludes to the number of shares traded during a particular time period.When analyzing volume patterns, accumulation is (basically) when a share is being bought, and distribution is (basically) when a specific share is being sold.
How Do You Identify Accumulation and Distribution?
In technical analysis, the accumulation/distribution (A/D) is an indicator that creates a relationship between changes in price and volume. The more volume that accompanies a price move, for example, the more significant (it tends to be assumed) that price move is. Analysts use accumulation/distribution (A/D) to affirm changes in prices by comparing the volume associated with prices.When analyzing volume patterns, accumulation is (essentially) buying, and distribution is (essentially) selling. On the off chance that there is a high level of demand for a stock, it is being accumulated. Distribution alludes to when a stock shows more supply than demand as distribution.