Market Facilitation Index (BW MFI) - Guide Part 29

Market Facilitation Index (BW MFI)

Market Facilitation Index (BW MFI) Examines The Portion That Changes The Cost For Each Unit Of Volume.

The Market Facilitation Index (BW MFI) is calculated as follows:

MFI = (High - Low) / Volume

Where:

• High - The Higher Cost Of The Present Bar;

• Low - The Lowest Cost Of The Bar Today;

• Volume - Today's Bar Volume.

Market Facilitation Index (BW MFI)

The technical indicator "The Market Facilitation Index" (BW MFI) shows the cost change that occurs in one tick. The absolute values ​​of the indicator as such do not have an effective meaning, only the changes of the indicator have the meaning. Bill Williams attributes great significance to the indicator and volume changes:

- The Market Facilitation Index indicator rose and volume also rose, which suggests the following: a) more and more players enter the market (volume grows), b) newcomers open positions in the direction of the development of the bar, or that is, the displacement has begun and is getting fast.

- The Market Facilitation Index indicator has fallen and the volume has also fallen. This assumes that the market competitors are losing interest.

- The Market Facilitation Index indicator rose, however the volume has fallen. This suggests that the market does not have volume support from traders and the cost changes due to the speculations of traders "on the ground" (intermediaries - brokers and dealers).

- The Market Facilitation Index indicator has fallen, however, the volume rose. There is a battle between the bulls and bears that is characterized by a large volume of purchases and sales, but with a weak displacement of the same cost as a consequence of the equitable force in the two directions. One of both military pieces (buyers versus sellers) is going to triumph. Mainly the dissolution of this bar indicates whether or not this bar establishes the continuation of the trend, or cancels it. Bill Williams calls this bar "seated".

Use

The absolute cost of the index is the elevation of the pictogram bar, and the comparison of the dynamics of the index with the dynamics of the volume is reflected in the color of the bar, which is essential for the interpretation of the indicator:

- Green bar - both the MFI index and the volume keep growing. The increasing activity of traders benefits the acceleration of the movement. It is worth joining the trend.

- Blue bar - MFI index is growing, volume is decreasing. The market shift continues its course despite a drop in volume. The trend can change fast.

- Pink bar - MFI index is falling, volume is growing. The shift is slowing down, while the increasing volume would spell the probability of a breakout or trend reversal.

- Brown bar - both the MFI index and the volume keep falling. The market is not holding the current trend and is waiting for signs for its future development.

https://www.tradingview.com/x/Bp0nb3Xf/ [/ image]

Another way is by using the LazyBear flag.

Bill Williams' Market Facilitation Index charts the effectiveness of cost displacement by calculating cost displacement per unit volume.

4 possible combinations of MFIndex and Volume are:

Regular - Green: MFIndex increases and increases the volume. This means that the proportion of competitors entering the market increases, consequently, the volume increases and the new entrants align their positions in the direction of the increase of the candles.

Fade - Blue: MFIndex drops and the volume drops. it assumes that market competitors are indifferent and the cost shift is tiny in small volumes. This often happens to finally happen from a trend.

False - Gray: MFIndex increases, however the volume falls. It is quite possible that the market is supported by the speculation of the brokers and not by a significant volume of consumers.

Squat - Red: MFIndex drops, but volume increases. In this special case, the bulls and bears keep fighting each other to see who will dominate the next trend. These battles are noted for the huge volumes of purchase and marketing. However, the cost does not change appreciably because the strengths are equivalent. One of the competing pieces, whether it be the consumers or the sellers, will ultimately triumph in the contest. In most cases, the breaking of that candle suggests whether this particular candle establishes the continuation of the trend or if it ends it.

https://www.tradingview.com/x/lBiiMZId/