Money Flow Index (MFI)

The money flow index is RSI with volume poured in. Instead of averaging price gains and losses, it averages typical-price gains and losses multiplied by volume. The scale is 0 to 100. 80 and 20 are the common fences. A reading near 100 means the recent up bars were the ones with the volume. It needs real volume to mean what the formula says.

If price rises on heavy volume, MFI rises faster than RSI. If price rises on thin volume, MFI can lag RSI or diverge from it. That divergence, price up and MFI failing, is the usual warning that participation did not confirm the push. It is a warning, not a short. On forex tick-volume feeds, treat MFI as a tick-activity tool, not as share-volume money flow.

A turn up from below 20, with volume coming in on the up bars and price holding a low, is the bullish use. In an uptrend MFI can live between 40 and 80. Dips toward 40 that turn up fit continuation.

A turn down from above 80 is the bearish range use. A divergence at a high, price up and MFI down, says the up bars were not the heavy ones. Wait for structure before you sell the divergence.

Using MFI on a market with no volume and trusting the number. Also assuming 80 means institutions are selling. The formula cannot see who traded. It sees price change times size.

A single block trade can dominate the 14-bar sum. One print moves MFI as if a trend had changed. Check the volume bars before you obey the oscillator.