VolumeIntermediate[ MP.IND.MFI ]
MFI
Money Flow Index
The Money Flow Index is often called 'volume-weighted RSI'.
Category
Volume
Difficulty
Intermediate
Markets
Stocks, Indices, Crypto
Timeframe
1H, 4H
Combinations
2 tools
Signals
5 setups
LIVE CHARTMFI ACTIVE
[ HOW TO READ THE CHART ]
Green Zone: MFI > 80 with high volume → Real overbought: strong reversal signal
Red Zone: MFI < 20 with high volume → Real oversold: significant buy opportunity
Main Line: Rising MFI + rising RSI → Trend confirmed by volume: reliable
Confluence: Combine MFI with RSI for maximum probability
[ WHAT TO WATCH ON THE CHART ]
Observe how MFI behaves relative to key price points. Note moments when the indicator reaches extreme levels and how price reacts. Look for divergence patterns between the indicator and price movement.[ FORMULA ]
MFI = 100 - (100 / (1 + Money Ratio)) Positive Money Flow = Σ(TP × V) when TP > TP prev Negative Money Flow = Σ(TP × V) when TP < TP prev Money Ratio = Positive MF / Negative MF (over N periods)
What signals does MFI generate?
MFI > 80 with high volume → Real overbought: strong reversal signal
MFI < 20 with high volume → Real oversold: significant buy opportunity
Rising MFI + rising RSI → Trend confirmed by volume: reliable
MFI falls while RSI rises → Volume/price divergence: hidden weakness
MFI/price divergence + high volume → High-probability reversal
What is MFI and how does it work?
The Money Flow Index is often called 'volume-weighted RSI'. It combines price and volume in the same RSI formula, adding volume as a weight for each session. A session with the same RSI but double the volume has double the impact on MFI. This makes it significantly more reliable than pure RSI for identifying the real intensity of buyers/sellers. A high RSI with low volume can indicate a weak rally; a high MFI indicates the rally is supported by real volume.
How do you use MFI in trading?
MFI is used exactly like RSI but with enhanced interpretations:
1) OVERBOUGHT/OVERSOLD: Above 80 = overbought with volume: much stronger signal than RSI > 70. Below 20 = oversold with volume: much more reliable than RSI < 30. The key difference: if RSI = 75 but MFI = 45, the rally isn't supported by volume → hidden weakness.
2) DIVERGENCES WITH HIGH VOLUME: A bearish MFI/price divergence in the presence of high volume is a much stronger signal than an RSI divergence. Volume amplifies the significance of the divergence.
3) MFI vs RSI COMPARISON: If RSI and MFI move together → confirmed signal. If they diverge (RSI rises but MFI falls) → volume doesn't confirm the move: possible fake-out.
What are the strengths of MFI?
More reliable than RSI thanks to volume
Excellent for significant divergences
Naturally filters false signals at low volume
What are the limitations of MFI?
Requires reliable volume data (problematic on Forex)
Less known than RSI
Less smoothed than RSI in fast markets
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