Money Flow Index (Mfi)
| The Money Flow Index (MFI) is a technical indicator that uses price and volume to determine if an asset is under purchasing or selling pressure. The MFI indicator is calculated using the following formula: MFI = 100 - 100 / (1 + Money Flow Ratio) Money Flow Ratio = (14-period Positive Money Flow) / (14-period Negative Money Flow) Positive Money Flow = Typical Price x Volume for Period Negative Money Flow = Typical Price x Volume for Period Typical Price = (High + Low + Close) / 3 The MFI indicator ranges from 0 to 100. A reading of 0 indicates that all of the period's volume was negative and a reading of 100 indicates that all of the period's volume was positive. The MFI indicator is used to identify whether an asset is being bought or sold. If the MFI is above 80, it indicates that the asset is being bought and if the MFI is below 20, it indicates that the asset is being sold. The MFI indicator can be used to identify overbought and oversold conditions. An overbought condition occurs when the MFI is above 80 and an oversold condition occurs when the MFI is below 20. The MFI indicator can also be used to identify divergences. A bullish divergence occurs when the MFI is making higher lows while the price is making lower lows. A bearish divergence occurs when the MFI is making lower highs while the price is making higher highs. The MFI indicator can be used in conjunction with other technical indicators to generate buy and sell signals. |
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