MFI – In Theory

If you want to learn how to spot a money flow exhaustion beat, you are in luck.

Ingredients for one person:

240 sample 2 DS Bollinger Bands over halves (for better sense of location) – Dark Blue.

14 samle MFI on 30 min, lines at 21 and 79 – Light Blue.

120 sample stochastic D over halves, lines at 28 and 72 – Brown.

Once you get a warning shot, you need to keep an eye out for a reversal.

A reversal is taking place in two steps, in the form of a Money Flow divergence.

The first step is the money boost and the consecutive measuring exhaustion and the second step is a beat made by less enthusiasm before the complete turn.

The first thing you need is the Stochastic being in the upper or the lower third.

The warning shots are optimal conditions for a money flow extreme to develop. The width of the 240 Bollinger has to be over 80 pips, the stochastic needs to be deeply oversold / deeply overbought (10 / 90), the Money flow needs to be below 23 / above 77 and the 30-minute low/high outside the Bollinger or below 29 / above 71 and the entire canle outside the Bollinger.

i.e.:
(mfi[i]<23  && Low[i]<iBands(symbol,0,240,2,0,PRICE_MEDIAN,MODE_LOWER,i) && High[i]>iBands(symbol,0,60,2,0,PRICE_MEDIAN,MODE_LOWER,i)   || (mfi[i]<29 && High[i]<iBands(symbol,0,60,2,0,PRICE_MEDIAN,MODE_LOWER,i) && iStochastic(symbol,0,120,3,3,MODE_SMA,PRICE_MEDIAN,MODE_MAIN,i)<10)))
     && iBands(symbol,0,240,2,0,PRICE_MEDIAN,MODE_UPPER,i)-iBands(symbol,0,240,2,0,PRICE_MEDIAN,MODE_LOWER,i)>800*Point

This by itself does not mean much. The Money Flow needs to hit an extreme.

There is a 6 hours long moratorium from the physical peak print on the oscilator that I use to record the lowest / highest price level reading. This means no projection for 12 candles.

I put the MFI readings into an Array to be able to spot a new MFI low / high in relation to the history. For instance, the value made by the MFI peak has to be a new, 8-sample extreme.

mfi[ArrayMinimum(mfi,3,i+11)]<mfi[ArrayMinimum(mfi,8,i+14)


The projection zone gets printed beyond the "measuring leg / push". 

The static displacement sizes for the 4 lines are 8 pips, 14, 22 pips (upto this point would you expect the divergent leg / echo to get barring further money input) and 32 for the continuation.

The 26 pips suggested double down comes from statistical examinations.

The example below shows a “continuation” that only got to 16 pips. I would suggest to slap on a better than breakeven stop loss for the double sized position when at 10+ pips gains.

The crown is missing. Money flow step one hasn’t been made.

The Girl with the Dragon Tampon

– Taylor Swift is a biloionaire now – I told my musician coworker.

– That does not make sense – he responded -, Mick Jagger is not a billionaire after 60 years of sold out concerts.

I can name exactly 1 song she made, probably out of 20 albums. The only way she touched my life was me wanting to look up music made by Saylor Twift on SoundCloud out of curiosity: who the hell has the same urge to twist names the same way I do, and what else can they do?

This is a cup & handle (rounding bottom) with 2 more progression highs to be expected.