The Money Flow Index and RSI are very closely related. The main difference is that Money flow incorporates volume , while the RSI does not. Proponents of volume analysis believe it Volume is a leading indicator. Therefore, they also believe that Money flow will provide signals, and warn of possible reversals, in a more timely fashion than the RSI . One indicator is not better than the other, they are simply incorporating different elements and will, therefore, provide signals at different times.
How Money Flow Calculated Calculate the Typical Price for each of the last 14 periods. For each period, mark whether the typical price was higher or lower than the prior period. This will tell you whether Raw Money Flow is positive or negative. 1-Calculate Raw Money Flow by multiplying the Typical Price by Volume for that period. Use negative or positive numbers depending on whether the period was up or down (see step above). 2-Calculate the Money Flow Ratio by adding up all the positive money flows over the last 14 periods and dividing it by the negative money flows for the last 14 periods. 3-Calculate the Money Flow Index ( MFI ) using the ratio found in step four. 4-Continue doing the calculations as each new period ends, using only the last 14 periods of data.
This Indicator compressed by inverse Fisher Transform Calculation to find out Market turn out Points. Overbought and oversold doesn't necessarily mean the price will reverse, only that the price (factoring for volume ) is near the high or low of its recent price range. Basically look for a color flip of indicator (green/red) at overbought oversold region by threshold violation. For trading concept dm.
Appreciate if you can share the code. I want to make some changes to this script and I would be glad to share it back with you to use it for intraday momentum trades.