Money Flow Index (MFI) on a Live Bitcoin Chart

What it shows

The MFI line moves in a 0 to 100 pane. Guides at 80 and 20 mark the zones where one side has taken most of the money; at 50 the rising and falling flows roughly balance.

How Pravex works it out

1. For each candle, take the typical price: (high + low + close) ÷ 3, called hlc3.
2. Compare it with the previous candle’s typical price. If it rose, the candle’s money flow is typical price × volume and counts as positive. If it fell, the same number counts as negative. If it did not change, it counts for neither side.
3. Add up the positive flows and the negative flows separately over the last Length candles.
4. MFI = 100 − 100 ÷ (1 + positive sum ÷ negative sum). With no negative flow in the window the line reads 100.

Settings

Setting	Default	What changing it does
Length	14	How many candles the two sums cover. Shorter lengths hit 0 and 100 more often; longer ones stay closer to 50.

How traders read it

Readings of 80 and above are usually taken as a stretched upward run and 20 and below as a stretched downward one. Both describe the last 14 candles of money flow. Neither one is a call to buy or sell.

Because volume is inside the formula, a quiet drift upward on thin volume moves MFI less than the same drift on heavy volume. That is the reason people read it next to RSI: if the two disagree, volume is doing something the price changes alone do not show.

Divergence is the other common use. Price makes a new high while MFI makes a lower high, which says the latest push drew less money than the one before.

When it misleads

MFI only sorts a candle’s whole volume into up or down by one comparison of typical prices. A candle that closes flat after a huge two-way fight counts as no flow at all, and a tiny rise on enormous volume counts as a full positive flow. In a strong trend the line can sit above 80 or below 20 for long stretches. On a market without volume, such as spot gold, there is nothing to weigh, and the line cannot be drawn.

Questions and answers

How lopsided is the money flow at an MFI of 80?

Over the last 14 candles, the money flow on rising candles was at least four times the flow on falling ones (80 = 100 − 100 ÷ 5). It describes a strong one-sided run. It does not say the price has to turn.

Is MFI just an RSI with volume?

Close, with one twist. RSI adds up how big each price change was. MFI only asks whether the typical price rose or fell, then weighs that candle by typical price × volume, so a heavy-volume hour counts for far more than a quiet one.

Does MFI work with low-volume hours?

It still runs, but a thin hour adds little money to either sum, so the line barely moves. One busy hour in the 14-candle window can outweigh all the quiet ones around it.

Why can MFI fall on a green candle?

The sorting uses the typical price, (high + low + close) ÷ 3, not the candle colour. A candle can close above its open yet have a lower typical price than the candle before, and then its whole money flow counts as negative.

Related: Relative Strength Index, Chaikin Money Flow, On Balance Volume, Stochastic, every indicator.