Close Location Value (CLV) Definition
CLV is an indicator that states an asset closing price in relation to the High-Low range. This range is between +1 and -1. +1 indicates that the closing price is near its High and -1, near its low. This is used in technical analysis to analyze closing price within a stipulated time.
A Little More on What is Close Location Value (CLV)
The Close location value is an index for measuring the rate at which money flows into or out of a given security. The closing location value is not independently used to determine the price value but used with other equations to derive the accurate range. When the CLV range is +1 or multiplied by 100, this indicates that the closing price is near its high and it would be considered as a bullish sign. And when the range is -1 or -100, this indicates that the closing price is near its low and it could also be considered as a bearish sign. But, it is neutral when the CLV is close to zero.
Using Close Location Value
Closing value on its own is not ultimately used as a metric. This is because it is sensitive to fluctuations or random changes in price. It is preferred to use clv with other equations. A good example is when calculating the Accumulation / Distribution Line:
Acc/Dist = CLV * Period’s volume
When CLV is not used with other equations, it is a good indicator for confirming or rejecting possible divergences. Any trader using this strategy will also consider a short or long time frame for their CLV, this makes the CLV not to react to any price fluctuations.
However, rather than using the CLV, traders prefer to use stochastics. This is considered as a reliable high-low relationship metric. Stochastics deploys several formulas to analyze and determine the price location in the high-low range. This does not react to price fluctuations.