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Indicator

Money Flow Index

Assess buying and selling pressure using volume-weighted momentum to identify exhaustion and flow shifts — not a simple overbought/oversold tool.

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Key Takeaways

MFI combines price and volume to calculate money flow into and out of an asset.
It oscillates between 0 and 100.
Rising MFI indicates increasing buying pressure.
Falling MFI indicates increasing selling pressure.
Extreme readings indicate potential exhaustion, not automatic reversals.

What It Measures

MFI combines price and volume to calculate money flow into and out of an asset.
It oscillates between 0 and 100.
Rising MFI indicates increasing buying pressure.
Falling MFI indicates increasing selling pressure.
Extreme readings indicate potential exhaustion, not automatic reversals.

Institutional Use

MFI is used to assess whether trends are supported by capital flow and whether that flow is strengthening or weakening.
It is not used as a simple overbought or oversold indicator.
Its real value lies in identifying divergence between price and money flow, which often signals early stage exhaustion and liquidity shifts.

Key Signals

Readings above 80 indicate strong buying pressure and potential exhaustion zone.
Readings below 20 indicate strong selling pressure and potential exhaustion zone.
Divergence between MFI and price signals weakening participation.
Rising market with falling MFI indicates underlying weakness despite price strength.

Trading Playbook

Trend confirmation: enter when MFI is rising and on the correct side of 50.
Divergence setup: price makes higher highs while MFI weakens — wait for structural price confirmation before fading.
Exit when MFI diverges significantly from price or crosses back through the 50 level against position.

When Not to Trade

Avoid using MFI extreme readings as standalone reversal signals.
Do not rely on MFI in low volume or illiquid market conditions.