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Combining MACD and MFI to Visualize Divergence and Reversals

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Summary

This indicator applies the Money Flow Index (MFI) over Moving Average Convergence/Divergence (MACD) to display price divergence. It also uses MACD to highlight potential reversals on short timeframes, with a crossing between the MACD signal line and MFI proposed as an additional trade-entry cue. The MFI line changes color after the crossing.

Inputs include MACD histogram and MFI settings, plus a calibration factor that scales RSI-related values to account for MACD’s variation across timeframes. The document gives example calibration settings for EUR/USD across intraday and daily charts, but reports no backtest, performance statistics, or rules for exits and risk control. The crossing and divergence descriptions therefore explain indicator behavior rather than establish a validated standalone strategy.

Key ideas

  • MFI plotted with MACD is intended to make price divergence visible.
  • MACD is presented as a way to spot possible reversals on short timeframes.
  • A crossing between the MACD signal line and MFI can serve as an entry cue.
  • A calibration input adjusts scaling to differences in MACD values across timeframes.
  • The document provides no empirical evidence that these signals are profitable.

Tags

ForexTechnical indicatorsMomentum

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.