The Money Flow Index (MFI) is a momentum indicator that uses both price and trading volume to measure buying and selling pressure. It helps determine whether a symbol is entering overbought or oversold conditions.

For automated trading strategies, MFI can help identify situations where price movement may be overextended, which could signal a potential reversal or weakening trend.

What does the Money Flow Index measure?

The Money Flow Index analyzes price changes together with trading volume to estimate how much capital is flowing into or out of a symbol.

The indicator typically moves within a range from 0 to 100.

In general:

• Higher MFI values indicate stronger buying pressure
• Lower MFI values indicate stronger selling pressure

Traders often watch specific zones:

• Above 80 may suggest the symbol is overbought
• Below 20 may suggest the symbol is oversold

These levels help identify situations where the price may reverse or slow down.

How MFI is used in indicator-based triggers

In automation, MFI can be used to detect changes in buying or selling pressure based on both price and volume.

For example, strategies may monitor when:

• MFI crosses above a defined threshold, indicating strengthening buying pressure
• MFI falls below a defined value, suggesting increasing selling pressure
• MFI moves relative to another indicator, helping confirm whether a trend is supported by volume

These conditions allow automated strategies to react when market sentiment shifts between buyers and sellers.