Money Flow (MF) is a technical indicator used in the analysis of financial markets. It calculates the money flow volume over a specific period and is used to determine the strength of price trends and potential trend reversals.
The Money Flow indicator is calculated by multiplying the closing price of a security by the traded volume on that day. If the closing price is higher than the previous day's close, it is considered a positive money flow, while a lower price results in negative money flows.
Formula for Money Flow (MF): MF = (Closing price ' Lowest price) / (Highest price ' Lowest price) x Volume
The Money Flow index (MFI) is then calculated by taking a 14-period average of the Money Flow value. The MFI ranges from 0 to 100, with values above 80 indicating overbought conditions and values below 20 indicating oversold conditions.
Traders use the Money Flow indicator to identify potential trading opportunities when the MF diverges from price trends, which can indicate a potential trend reversal or continuation. It is often used in combination with other technical indicators to confirm trading signals.
Money Flow MF
Technical Indicator
Money Flow (MF) is a technical indicator used in the analysis of financial markets. It calculates the money flow volume over a specific period and is used to determine the strength of price trends and potential trend reversals.
The Money Flow indicator is calculated by multiplying the closing price of a security by the traded volume on that day. If the closing price is higher than the previous day's close, it is considered a positive money flow, while a lower price results in negative money flows.
Formula for Money Flow (MF): MF = (Closing price ' Lowest price) / (Highest price ' Lowest price) x Volume
The Money Flow index (MFI) is then calculated by taking a 14-period average of the Money Flow value. The MFI ranges from 0 to 100, with values above 80 indicating overbought conditions and values below 20 indicating oversold conditions.
Traders use the Money Flow indicator to identify potential trading opportunities when the MF diverges from price trends, which can indicate a potential trend reversal or continuation. It is often used in combination with other technical indicators to confirm trading signals.