The Money Flow Index (MFI) is a technical indicator that uses both price and volume data to measure buying and selling pressure in a security. The MFI is commonly used in technical analysis to determine overbought and oversold conditions in a security, as well as to identify potential trend reversals.

To calculate the MFI, a ratio of positive money flow and negative money flow is first calculated. Positive money flow is the sum of all price changes that occur on days where the typical price (average of high, low, and close) is higher than the previous day's typical price, multiplied by the volume for that day. Negative money flow is the sum of all price changes that occur on days where the typical price is lower than the previous day's typical price, multiplied by the volume for that day.

The MFI is then calculated by dividing the positive money flow by the negative money flow, and expressing the result as a percentage between 0 and 100. A reading above 80 is generally considered overbought, while a reading below 20 is generally considered oversold.

Traders can use the MFI to identify potential trend reversals when it diverges from the price trend. For example, if the price of a security is making higher highs, but the MFI is making lower highs, it may suggest that buying pressure is weakening and a downtrend reversal could be imminent. Conversely, if the price of a security is making lower lows, but the MFI is making higher lows, it may suggest that the selling pressure is weakening and an uptrend reversal could be imminent.