Money Flow Index (MFI)
The Money Flow Index (MFI) is a technical oscillator that uses both price and volume data for identifying overbought or oversold signals in an asset.
Dynamic Chart Demo
* This chart uses synthetic data to demonstrate the indicator's behavior in typical market conditions.
Core Usage
Advantages
- Adds volume weighting that RSI does not use
- Great for spotting exhaustion in a trend
- Shows buying and selling pressure that price alone does not
Limitations
- Can stay overextended in strong trends
- Produces false signals in choppy markets
- Volume data can be noisy or unreliable in some markets
Calculation Logic
Understanding the mathematical logic behind indicators helps you interpret signals more accurately and avoid misuse in unsuitable market environments.
Common Trading Strategies
MFI 80/20 Reversal
Look for sell opportunities when MFI drops below 80; Buy when it rises above 20.
MFI Divergence
Watch for a reversal when Price and MFI show conflicting trends.
Best For
"Identifying volume-backed momentum reversals."
Note: Technical indicators are mathematical calculations based on historical price and volume. They should be used as part of a comprehensive trading system, not as a standalone entry signal.