Market Facilitation Index

An indicator developed by Dr Bill Williams to gauge the efficiency of a price movement. It is calculated by combining price and volume: MFI = (High-Low) / Volume. By comparing the current candle's MFI and volume with the previous candle's MFI and volume, four possible scenarios may be formed: MFI rises and Volume rises (Green): The market is accelerating as new traders enter the market. This is assigned a Green color indicating that traders should be having positions in the direction of the prevailing trend. MFI declines and Volume declines (Fade): Both MFI and Volume fade, resulting in no interest to advance further. This usually occurs at the end of a trend. MFI rises and Volume declines (Fake): Price movement without the confirmation of Volume is a sign of a fake move. MFI declines and Volume rises (Squat): The increased Volume signifies the increased number of participants entering the market. The Squat as Bill Williams named it, implies a reversal in the opposite direction or continuation of the prevailing trend. The breakout of the corresponding candle will usually define the direction.

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