Money Flow

The Money Flow indicator, developed by Marc Chaiken, examines volume and price to measure buying and selling pressure on a security over the past n periods.

Buying and selling pressure is determined by the security's close relative to its trading range for the period.

When a security closes in the top half of its range for the period, the volume is attributed to buying pressure. Conversely, selling pressure arises when the security closes in the bottom half of its range.

Interpretation:

The Money Flow line oscillates above and below a zero line. When the Money Flow indicator declines and turns negative (falls below the zero line), it may indicate that the security is under pressure from sellers.

Buying pressure, on the other hand, pushes the indicator higher. In general, some technical analysts believe that Money Flow levels of -0.25 or lower may reflect bearish sentiment towards a security .Similarly, Money Flow readings of 0.25 or higher may reflect bullish sentiment towards a security.

Long periods below the zero line may indicate sustained selling pressure, while long periods in positive territory may indicate sustained buying pressure.

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