A volume-weighted RSI that measures buying and selling pressure.
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Overview
The Money Flow Index (MFI) was developed by Gene Quong and Avrum Soudack and is sometimes called the "volume-weighted RSI" because its construction mirrors RSI's logic but incorporates volume into each period's calculation. This makes MFI a more comprehensive measure of money flow — the actual buying and selling pressure — rather than just price momentum.
The indicator starts with Typical Price (High + Low + Close) / 3. When typical price rises from the prior period, the day's Raw Money Flow (Typical Price × Volume) is positive; when it falls, it is negative. The ratio of positive to negative money flow over the lookback period is transformed through the same RSI formula to produce a 0–100 oscillator.
Like RSI, values above 80 are considered overbought and values below 20 oversold — but because volume is included, these signals are considered more reliable than RSI alone. A security with high price but declining MFI suggests that the rally is not supported by increasing participation, which is bearish.
MFI divergence is particularly valued: when price makes new highs but MFI fails to confirm, it suggests distribution is occurring. The reverse signals accumulation before an upside move. This makes MFI a leading indicator capable of anticipating reversals before they appear in price alone.
Strategy Code
This is a TradingView Pine Script example for this indicator. Paste it into the TradingView Pine Editor, add it to your chart, and adjust inputs for your market and timeframe.
//@version=6
strategy("Money Flow Index (MFI)", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript example for this indicator. Open thinkorswim, create a custom study, paste the script, and apply it to your chart.
input length = 14;
def mfi = MoneyFlowIndex(length = length);
def buySignal = mfi crosses above 20;
def sellSignal = mfi crosses below 80;
AddOrder(OrderType.BUY_AUTO, buySignal, close, 1, Color.GREEN, Color.GREEN, "MFI Buy");Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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