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Money Flow Index (MFI)

The MF (Money Flow Index) compares the value traded on up-days to value traded on down-days and anticipates trend weakness and any points of reverse shift. It is a volume-weighted variant of the Relative Strength Index.

1) Measure Money Flow for every time period:

Typical Price * Volume

2) Measure Typical Price for every time period:

(High + Low + Close) / 3

Make decision on the time period over which to measure the index which should be based on the cycle that you are trading.

3) Measure Negative Money Flow: Add Money Flow for every period (in the time period) that Typical Price shifts down.

4) Measure Positive Money Flow: Add Money Flow for every period (in the time period) that Typical Price shifts up.

5) Measure the Money Flow Index: 100 - 100 / (1+ Money Ratio)

6) Measure the Money Ratio: Negative Money Flow / Positive Money Flow

That's why Money Flow Index (MFI) is an indicator which depicts the intensity the money is invested in a commodity or withdrawn from it. Forming and interpreting this indicator resemble those of RSI; the distinction is that the MFI also refers to volume.

It's important to remember while analyzing the MFI: discrepancies between indicator and price shift. If prices grow and MFI decreases, the chance of price turning is very high. MFI values over 80 and below 20 means respectively about the market foundation or potential high.