What Is Close Location Value (CLV)?

Close location value (CLV) is a metric utilized in technical analysis to assess where the closing price of a security falls relative to its day's hi🥂gh and low pri💞ces.

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 tool that measures the location of the price in relation to the high-low range. It moves in the range from -1 to +1, or, if multiplied by 100, in the range from -100% to +100%.

Close location v💧alue (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 might be considered a bearish sign. CLV readings that are close to zero are considered neutral.

Example of How to Use Closeꦗ Location Value (CLV)

O👍n its own, the close location value (CLV) is not considered to be very important by most traders. This indicator is primarily used as 🌱a variable in other technical equations.

The CLV features prominently, for example, in the calculation for the accumulation/distribution (A/D) line (also called the 澳洲幸运5官方开♛奖结果体彩网:a🐬ccumulation/distribution indicator [A/D] ):

$\begin{aligned} &\text{Accumulation/Distribution} = \text{CLV} \times \text{Period's Volume} \\ \end{aligned}$​Accumulation/Distribution=CLV×Period’s Volume​

When not part of another equation, the close location value (CLV) can also be used to confirm or reject possible divergences. Keep in mind: It is advisable for any traders using this strategy to use an intermediate or long-ti🐠me period for their CLV (because this allows enough of a historical perspective to prevent overreacting to every fluctuation)🍒.

The Differen𒉰ce Between Close Location Value (CLV) anꦐd the Accumulation/Distribution Indicator (A/D)

In general, the goal of technical analysis꧙ is to predict future price movements; 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 some of the most commonly used charting platforms. Volume is often viewed as an indicator of 澳洲幸运5官方开奖结果体彩网:liquidity because stocks or markets with the most volume are the most liquid and considered the best for short-term trading. (In other words, there are many buyers and sellers ready to trade at various pricesꩲ.)

The accumulation/distribution indicator (A/D) uses volume and price to assess whether a stock is being accumulated or distributed and seeks to identify 澳洲幸运5官方开奖结果体彩网:divergences between the stock pri🍌ce 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) is not considered useful on its own is that it is extremely sensitive to random spikes or drops in prices. This heightened volatility renders it almost useless in many circumstances. (As a reliable high-low relationship metric, 澳洲幸运5官方开奖结果体彩网:stochastics 🍸are often preferred—instead of close location value (CLV)—because they are less choppy and rely on a differඣent formula to determine price location in the high-low range.

The Formula for Close Location Value (CLV) Is

$\begin{aligned} &\text{CLV} = \frac { ( \text{Close} - \text{Low} ) - ( \text{High} - \text{Close} ) }{ \text{High} - \text{Low} } \\ \end{aligned}$​CLV=High−Low(Close−Low)−(High−Close)​​