The MFI is a measure of the market’s willingness to move the price. I cannot overemphasize the value forex marked this indicator. In his book “Trading Chaos” Bill Williams introduces a new method of combining price and volume in order to see the true market development.
Should the interest of one large group of investors vaporize, the volume drops and from that point efficiency of the market goes down as well. How to interpret BW MFI MFI can be used for all time frames from 5 minutes up to daily and weekly frames. All that’s left to do is to know how to read and interpret different colors given by MFI indicator. MFI bar color Conditions Bar Name by B.
Therefore, traders’ best immediate reaction should be to go with the market, whatever direction it is heading. On such green day you would already want to have an open trade in the direction of the market move. If there were any trades left open, make sure they are not going against the market, otherwise they risk to bring losses. Often this can be observed at the end of a trend. Several brown bars in a row can perfectly illustrate the period where fading excitement is slowly building the base for a new market move. Bill Williams calls it “the strongest potential money maker” of the 4 setups. The squat bar is marked by an increasing volume yet temporary stalling price movement.