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Money Flow Index (MFI)

Created by Gene Quong and Avrum Soudack. The Money Flow Index is a momentum indicator that has a range between 0 to 100. This indicator is similar to the Relative Strength Index, but the MFI is less rigid.

Example

Interpretation

With it you can see the enthusiasm of the market. It shows how much was traded. The Money Flow Index shows divergences and overbought and oversold conditions. The oversold level is 20 and the overbought level is 80. A bullish and bearish sign respectively.

Calculation

Typical Price = (High + Low + Close)/3
Raw Money Flow = Typical Price x Volume
Money Flow Ratio = (14-period Positive Money Flow)/(14-period Negative Money Flow)
Money Flow Index = 100 - 100/(1 + Money Flow Ratio)

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