We continue looking at a shorter term look the EUR/JPY in a 4H charts here.

7. On Friday the 14th, the week long uptrend, discussed in note 6, encounters strong resistance. Investors come up against the same price, 147.10, that had turned back an uptrend in early July.
   
   1. After the weekend investors test resistance one more time. By late Monday price heads down to a 23.6% Fibonacci retraction.
   2. On Tuesday, the retraction continued to 38.2%, hitting the last clear support around 146.20. Tuesday's bottom corresponds with a bullish signal from CMF; it had bounced off touching negative territory and was recovering to +.10.
   3. CMF and price continue rising on Wednesday, after an initial dip to support at 145.20 in early trading, and on Thursday price breaks through resistance to reaches 147.80.


8. Strong resistance: Price peaks three times, at this next important resistance level, between July 20th and the 27th. The pair finds important support as well, so price enters ranging conditions between resistance at 147.80 and support at 146.90.
   1. The first price peak corresponds with a peak on Chaikin Money Flow, above +.25, after which smart money sells the pair. There is distribution for the next 6 days.
   2. On Monday and Tuesday, there are two smaller highs, but CMF continues falling.
   3. Price submits to the selling pressure on Wednesday, retesting support. CMF has reached -.10, so the chance of a bounce up off support, and the CMF level, is likely.
      
   4. The rebound sets a third peak, at a new high of 148. However, accumulation is not strong, and as price stalls, it falls back below the zero line. A major divergence between the indicator and the price becomes apparent.
      
   5. Finally, price catches up to distribution, the divergence acting as a big signal to many investors at the same time. EUR/JPY falls for three sessions from 148 to 145.70, a 200 pip drop.
      

9. The pair bottoms out and starts a sequence of higher lows. On Tuesday, CMF heads up from -.10 to +.10 in one session. The two signal, higher lows and a cross of CMF's zero line, are indications to buy the pair.
   
   1. On Wednesday, there is some retraction, in the opposite direction of our long position. CMF stays above +.10 however, and on Thursday price recovers.
   2. The upward trend lasts 8 sessions.
10. From Aug. 8th to Aug 11th, there is a bit of divergence. As price reaches 148.50, selling occurs that does not reach past 0 on the CMF indicator. Distribution is not that intense, probably a correction.
    1. CMF bounces off the zero line, staying in positive territory and it, along with price, begins inching up.
    2. On Thursday, the 17th, accumulation falters, and there is a change towards some distribution.
       

11. Distribution started on Thursday from the previous note, does not amount to much. Before the week is done, CMF has turned back upwards. For the next week, the indicator is somewhat inconclusive. The indicator is in positive territory but it hovers between 0 and +.10, threntening to head below the zeroline.
    


12. On Agusts 24th, CMF dips to -.10, after a big red candle. Price finds support at 148.50, a resistance level turned support from earlier in the analysis. CMF, from this negative measure, starts heading up, crossing the zero line. The move up from -.10 to +.10, at 150, is a change of 150 pips. As the week unfolds, ther are clear signs of accumulation once more, as CMF stays positive. There are measured moves up, as the price level 150, is the highest level that the Euro has reached against the Euro since its inception.
    

Our last note is an example of combining long term analysis with short term analysis. As soon as a technical trader sees accumulation after a week and half of inconclusive trends on CMF that trader should buy. The reason being that the long term pervailing trend has been one of Euro apreciation. Now, the one problem is that most of the move is finished by the time CMF reaches +.10. An even shorter time frame for entry would have been more useful. Of course using other indicators and trendlines would give clearer entries as CMF should be used to clarify and confirm decisions that have already been made. Sometimes it can give its own signals, as we have seen, but for the most part it should play this secondary role.

Now that we have looked at Chaikin Money Flow from both a long term and a short term perspective, I would highly encourage you to practice backtesting its results with other pairs and other time frames. If you do not currently have a demo of CMS's trading platfrom - VT Trader - you shouldn't hesitate to sign up for one and test this technical analysis indicator for yourself.