EDUCATION: Money Flow Index (MFI)
Hello, dear subscribers!
The topic of this article is Money Flow Index Strategy (MFI).
Definition
This is the oscillator type indicator, which looks like RSI, but takes in account the volume.
Thus it demonsrates not only the price momentum, but also the money volume.
It is calculated as a ratio of the positive or negtative money volume divided by the total money flow. MFI indicates the overbought and oversold conditions. The asset is overbought when its value is above 80 and oversold, when below 20.
The strategy
Let's take a look at how to execute the long positions. Initially we should make sure that the market is in global uptrend now. For this purpose we will use the 200 period SMA. If the price is above the SMA, which has a positive slope the market is in uptrend now.
The second step is the bullish hidden divergence identification. As we told in the previous education article the hidden bullish divergence with the oscillators means the uptrend continuation.
The third point of this analysis is that the asset now is in oversold zone according to MFI.
The topic of this article is Money Flow Index Strategy (MFI).
Definition
This is the oscillator type indicator, which looks like RSI, but takes in account the volume.
Thus it demonsrates not only the price momentum, but also the money volume.
It is calculated as a ratio of the positive or negtative money volume divided by the total money flow. MFI indicates the overbought and oversold conditions. The asset is overbought when its value is above 80 and oversold, when below 20.
The strategy
Let's take a look at how to execute the long positions. Initially we should make sure that the market is in global uptrend now. For this purpose we will use the 200 period SMA. If the price is above the SMA, which has a positive slope the market is in uptrend now.
The second step is the bullish hidden divergence identification. As we told in the previous education article the hidden bullish divergence with the oscillators means the uptrend continuation.
The third point of this analysis is that the asset now is in oversold zone according to MFI.
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