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Close Location Value
The Close Location Value (CLV) is one of the indicators using the location of Close
related to Low and High for the same period. It is, therefore, trying to spot the tendency in the price move of the security.
  • When the CLV and a stock price form a positive (negative) divergence, we consider it a bullish (bearish) signal.
  • When the CLV is crossing zero line. Positive CLV is considered bullish and vice versa.

The CLV is based on the daily price action, and therefore it is ignoring overnight gaps. Consider the stock falling dramatically overnight, and then regaining part of its value next day. The CLV will actually jump UP, as the "next day" price action is very bullish and the gap is not even considered by the indicator. To avoid this trap, keep an eye open for gaps, and do not rely on fast moves - to detect the divergence with confidence, allow it some time (2+ months) to mature.

Formula:

The Close Location Value indicator is calculated like:

 


Close Location Value

((CLOSE - LOW) - (HIGH - CLOSE)) / (HIGH - LOW)

 

This approach is working by determining the location of the Close compared to the Low and High. The indicator oscillates between -1 and 1, the closer the CLOSE is to the High, the closer it is to one, which is considered a bullish signal. The closer period's CLOSE is to Low, the closer the indicator value is to -1, which is considered bearish.
Source / From: TOP
http://www.fongan.net

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