Money Flow Index
Money Flow Index is the volume-weighted RSI — it measures overbought/oversold while incorporating buying and selling pressure.
What It Measures
Volume-weighted momentum 0-100: whether money flow has been dominantly positive or negative.
The Math (Simplified)
Typical Price = (H+L+C)/3, Raw Money Flow = TP×Volume. Split flows into positive (TP up) and negative (TP down) over N days, then MFI = 100 - 100/(1 + Σ positive / Σ negative).
Default Inputs & Tuning
14 days is standard. Levels 20 (oversold) and 80 (overbought) are used like RSI, but MFI reacts to volume too.
When It Works (Market Edge)
Spotting exhaustion in high-volume moves: MFI over 80 with price stalling can warn of a pullback better than RSI alone.
When It Fails
Trending high-volume markets: MFI can stay above 80 in a strong uptrend on persistent buying — same trap as RSI overbought.
Common Myths
Myth: MFI is just RSI with volume, so it is always better.
Truth: Volume weighting helps when volume matters (breakouts), but in low-volume drift RSI and MFI behave similarly and MFI can be noisier.
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