The Money Flow Index is intended to measure the strength of the money flow into
and out of a security. A divergence between the Money Flow Index and price trend
may signal an imminent reversal. The Money Flow Index varies between 1 and 100.
A value above 80 usually coincides with a market top, and a value below 20 with
a market bottom.
To calculate the Money Flow Index, The Bourse weights the average price for each
period by the volume for that period to give the money flows. It then averages separately,
the values with a positive and a negative value over a term you specify. The averaged
positive money flows are then divided by the averaged negative money flows to give
the money ratio. The Money Flow Index is calculated by dividing negative one hundred
by one plus the money ratio.
You may wish to add some type of Moving Average to this indicator's graph.