14-RSI minus 36-MFI (weekly)

The 14-RSI minus 36-MFI (weekly) indicator calculates the difference between the Relative Strength Index (RSI) and the Money Flow Index (MFI) to identify potential buy and sell opportunities based on momentum and volume-weighted price action.

Usage

The indicator is primarily designed for use on weekly timeframes, specifically optimized for assets like BTC/USD. By subtracting the MFI from the RSI, traders can identify divergences between pure price momentum and volume-backed momentum.

• Bullish Signals: Look for the "Diff" line to cross above the "Diff Oversold" level (e.g., -8), suggesting that price momentum is beginning to outpace money flow at depressed levels.
• Bearish Signals: Look for the "Diff" line to cross below the "Diff Overbought" level (e.g., 8), suggesting that price momentum is fading relative to money flow at elevated levels.

Details

The script calculates a custom RSI using a 14-period Relative Moving Average (RMA) based on the median price (HL2). Simultaneously, it calculates a 36-period Money Flow Index (MFI) using the same price source and volume. The final output is the arithmetic difference between these two oscillators. This approach highlights periods where price strength (RSI) is not supported by volume strength (MFI) or vice versa, providing a unique perspective on trend exhaustion.

Settings

RSI Settings

• RSI Length: The lookback period for the RSI calculation (default: 14).
• RSI Oversold: Reference level for RSI oversold conditions.
• RSI Overbought: Reference level for RSI overbought conditions.

Money Flow Settings

• Money Flow Length: The lookback period for the MFI calculation (default: 36).
• Money Flow Overbought: Reference level for MFI overbought conditions.
• Money Flow Oversold: Reference level for MFI oversold conditions.

Difference Settings

• Diff Oversold: The threshold level for the difference line to trigger potential bullish alerts.
• Diff Overbought: The threshold level for the difference line to trigger potential bearish alerts.

FAQ

How do I interpret the Diff line?

The Diff line represents the spread between price momentum (RSI) and volume-weighted momentum (MFI). A high positive value suggests RSI is significantly higher than MFI, while a low negative value suggests MFI is significantly higher than RSI.

Is this indicator only for the weekly timeframe?

While the original concept was developed for the weekly chart of BTC/USD, the settings are adjustable, allowing users to experiment with different assets and timeframes.

How can I access this indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.