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Money Flow Index (MFI)
The Money Flow Index measures the amount of money flowing in and out of a security.
It's a good measure of the strength of money flowing in and out of a security.
It
compares "positive money flow" to "negative money flow" to create an
indicator that can be compared to price in order to identify the
strength or weakness of a trend.
- A divergence between price and MFI often signals an imminent reversal of the trend.
- Readings below 20 on the scale are considered oversold (bullish).
- Readings above 80 on the scale are considered overbought (bearish).
When
analyzing the MFI the following should be taken into account:
divergences between indicator and price movement. If prices increase
and MFI falls (or vice versa), the probability of price turning is very
high. MFI values higher than 80 and lower than 20 signalizes
respectively about potential peak or foundation of the market.

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