What is the calculation process for the Money Flow Index in the context of cryptocurrency?

1 answers

• Poll3r1nkOct 04, 2024 · a year ago
  The calculation process for the Money Flow Index (MFI) is a bit complex, but I'll break it down for you. First, you need to gather the necessary data, including the high, low, closing prices, and volume for each period. Then, calculate the typical price by summing the high, low, and closing prices and dividing by three. Next, multiply the typical price by the volume to get the raw money flow. Determine whether the money flow is positive or negative based on the comparison between the current and previous typical prices. Finally, calculate the money ratio by dividing the sum of positive money flows by the sum of negative money flows. The MFI is then derived by dividing 100 by (1 + money ratio). This indicator is widely used in technical analysis to identify potential trend reversals and overbought/oversold conditions in the cryptocurrency market.
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