Inchart MFI signals
Jun 14, 2017
The Inchart MFI signals indicator identifies overbought and oversold market conditions by plotting signal triangles directly on the price chart when the Money Flow Index (MFI) crosses user-defined threshold levels.
Usage
The Usage of this indicator focuses on identifying potential reversal zones based on volume-weighted price momentum.
- Bullish Signal: A green upward-pointing triangle appears at the bottom of the chart when the MFI falls below the lower threshold (default 20), indicating an oversold condition.
- Bearish Signal: A red downward-pointing triangle appears at the top of the chart when the MFI rises above the upper threshold (default 80), indicating an overbought condition.
Traders can use these signals to anticipate exhaustion in current trends or as part of a broader mean-reversion strategy.
Details
The indicator calculates the Money Flow Index (MFI) using the standard formula which incorporates typical price (HLC3) and volume over a specified lookback period.
- Typical Price: Calculated as
(High + Low + Close) / 3. - Money Flow: Determined by multiplying the typical price by the volume.
- Money Ratio: The ratio of positive money flow (days where typical price increased) to negative money flow (days where typical price decreased) over the length period.
- MFI Formula:
100 - (100 / (1 + Money Ratio)).
By overlaying these signals on the chart, it removes the need for a separate oscillator pane, allowing for a cleaner workspace while still monitoring volume-based momentum.
Settings
- length: The number of bars used to calculate the Money Flow Index (default is 14).
- lower: The threshold level below which the market is considered oversold (default is 20).
- upper: The threshold level above which the market is considered overbought (default is 80).
FAQ
How do I access Inchart MFI signals?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
Can I change the sensitivity of the signals?
Yes, by decreasing the "length" or widening the "lower" and "upper" levels, you can make the indicator more or less sensitive to price and volume fluctuations.
Does this indicator repain?
No, the signals are calculated based on completed bar data. However, the signal may appear and disappear during the formation of the current live bar until it closes.
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