What is the Money Flow Index (MFI) indicator?
In the family of oscillators, such as RSI, ROC or stochastic oscillator, MFI ( Money Flow Index ) is a low-profile, yet important, technical analysis tool used to generate overbought or oversold signals. Just like with other oscillators, analysts place the MFI indicator between two extreme values from 0 to 100 and use 90 and 10 levels to identify overbought or oversold conditions, respectively. Compared to other oscillators, Money Flow Index uses price and volume to signify a sell or buy opportunity for an asset. Traders implement it to define divergences, which alert them to be prepared for a trend change. Oscillators, such as MFI, are most advantageous when it’s hard to spot a clear trend in a stock price. Investors find it one of the most important tools and combine it with other technical indicators, such as RSI, MACD, Stochastics and more. 1. Divergence on the MFI chart Let’s say the MFI line indicates an uptrend or a...