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Using the Bollinger band and Channel techniques to analyze MFI
I'm sharing this note for myself as a reminder how to use MFI.
According to Stockcharts-com, "the Money Flow Index (MFI) can be interpreted similarly to RSI. The big difference is, of course, volume. Because volume is added to the mix, the Money Flow Index will act a little differently than RSI. Theories suggest that volume leads prices. RSI is a momentum oscillator that already leads prices. Incorporating volume can increase this lead time. First, chartists can look for overbought or oversold levels to warn of unsustainable price extremes. Second, bullish and bearish divergence can be used to anticipate trend reversals. Third, failure swings at 80 or 20 can also be used to identify potential price reversals."
I added the Bollinger band and Donchian Channels to analyze each data point of the Money Flow Index. The Bollinger band helps identification and anticipation of of the price action squeezes whereas the Donchian Channels guide the entries and exits for active traders.
I will give more examples on this MFI as I further use it within the Tradingview ecosystem.
According to Stockcharts-com, "the Money Flow Index (MFI) can be interpreted similarly to RSI. The big difference is, of course, volume. Because volume is added to the mix, the Money Flow Index will act a little differently than RSI. Theories suggest that volume leads prices. RSI is a momentum oscillator that already leads prices. Incorporating volume can increase this lead time. First, chartists can look for overbought or oversold levels to warn of unsustainable price extremes. Second, bullish and bearish divergence can be used to anticipate trend reversals. Third, failure swings at 80 or 20 can also be used to identify potential price reversals."
I added the Bollinger band and Donchian Channels to analyze each data point of the Money Flow Index. The Bollinger band helps identification and anticipation of of the price action squeezes whereas the Donchian Channels guide the entries and exits for active traders.
I will give more examples on this MFI as I further use it within the Tradingview ecosystem.
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