The Market Facilitation Index technical indicator (BW MFI) shows a price change on one tick. The absolute indicator values themselves mean nothing, only the indicator changes make sense. Bill Williams attaches great importance to changes in the indicator and volume:
- The Market Facilitation Index indicator rose and the volume rose too, this means that:
a) more and more players are entering the market (the volume is growing);
b) newly arriving players are opening positions in the direction of the bar’s development, i.e. the movement has begun and is gaining speed.
- The Market Facilitation Index indicator fell and the volume fell too. This means that the market participants lost interest.
- The Market Facilitation Index indicator rose, but the volume fell. The market is not supported by the volume from traders, and the price changes thanks to speculations of "floor" traders (intermediaries: brokers and dealers).
- The Market Facilitation Index indicator fell, but the volume rose. A battle between bulls and bears takes place, with a large volume of buys and sells, but with a slight movement of the price itself due to approximately equal forces. One of two opposing sides (buyers vs sellers) will win. Usually a breakout of such a bar indicates whether this bar determines the trend continuation or the trend is canceled. Bill Williams call such a bar “crouching”.
The indicator view in the chart.
The indicator has the following parameters:
Multiplier - setting of the indicator value multiplication.
Panel/Moving average period - selection of the indicator location in the chart:
- New panel
Show value - display of the indicator value on the price scale on the left.
Scale/Auto-scaling - if this option is on, the scale will be automatically calculated, based on the minimum and maximum indicator values, so that the indicator would fit in the chart.
Color - color setting of the indicator.
Visual type - visual setting of the indicator display in the chart:
- Up arrow
- Down arrow
- Axis label
Line style - setting of the line display style:
- Dash - dot
- Dash - dot - dot
Width - setting of the indicator line width.
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