Money Flow Index (MFI)
Original schematic showing the guide's principal visual relationships.
MFI = 100 − 100/(1 + positive money flow ÷ negative money flow).
Formula and components
A bounded momentum oscillator that applies volume weighting to positive and negative typical-price flows.
MFI = 100 − 100/(1 + positive money flow ÷ negative money flow).
How it works
The indicator transforms price, range, or volume observations over a selected lookback. Shorter settings react faster but create more noise; longer settings respond more slowly and emphasize the underlying regime. Always compare the reading with price structure and timeframe.
How to read it
80/20 zones, centerline behavior, and divergence describe volume-weighted momentum and possible exhaustion.
Practical example
MFI rises above 80 as price and volume accelerate. The reading shows strong volume-weighted momentum, not an automatic top; a bearish divergence plus a price break provides more useful confirmation.
Confirmation checklist
Confirm that participation supports the price move and compare like-for-like sessions. One unusual print or event-driven spike should not define the entire signal.
Limitations and false signals
MFI inherits oscillator timing problems and depends on reliable volume, making it less comparable across fragmented markets.
Limitations and false signals
Frequently asked questions
What does this pattern or indicator describe?
A bounded momentum oscillator that applies volume weighting to positive and negative typical-price flows.
How should the signal be confirmed?
80/20 zones, centerline behavior, and divergence describe volume-weighted momentum and possible exhaustion. Confirm that participation supports the price move and compare like-for-like sessions. One unusual print or event-driven spike should not define the entire signal.
What can cause a false signal?
MFI inherits oscillator timing problems and depends on reliable volume, making it less comparable across fragmented markets.