Definition
MFI uses both price and volume to measure buying and selling pressure. Like RSI, it ranges from 0-100 with overbought above 80 and oversold below 20. It's often called the volume-weighted RSI and can confirm or diverge from price moves.
Formula
MFI = 100 - (100 / (1 + Money Flow Ratio))
Example
An MFI of 85 with rising price confirms strong buying pressure. An MFI of 85 while price makes new highs but MFI doesn't (divergence) may warn of reversal.
FAQ
What is Money Flow Index (MFI)?
A volume-weighted RSI that incorporates volume data.
How do you calculate Money Flow Index (MFI)?
A common formula for Money Flow Index (MFI) is: MFI = 100 - (100 / (1 + Money Flow Ratio))
Why is Money Flow Index (MFI) important?
Money Flow Index (MFI) helps investors evaluate technical analysis and make more informed decisions.