MFI - Money Flow Index
The Money Flow Index (MFI) is a technical oscillator which is similar to Relative Strength Index (RSI) except that it uses volume in addition to price for identifying overbought or oversold conditions of an instrument. It can also be used to spot divergences which warn of a trend change in price. The MFI oscillator varies between 0 and 100.
Money Flow = Typical Price * Volume
If Typical price > Previous Typical Price, then
Positive Money Flow = Previous Positive Money Flow + Money Flow
Else,
Negative Money Flow = Previous Negative Money Flow + Money Flow
The default n period is 14.
A Money flow index (MFI) reading above 80 is considered overbought and an MFI reading below 20 is considered oversold, also indicating the prices are near high or low of its recent price range. MFI could also be used to identify the divergence in price or potential reversal in trend i.e., when MFI is moving in the opposite direction of the price.
Money flow Index on Chart
Chart Source: Fyers