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Strategy MFI Extreme Divergence H1 is an effective and universal trading strategy that can be applied to various trading assets on the H1 timeframe. This system is implemented using the Money Flow Index indicator and the moving average indicator.
You can download the Money Flow Index indicator on our website here.
Indicator settings
The ExtMFIPeriod value for the MFI indicator is set to 14 (the default value).
The indicator period MA (moving average) is set to 6.
Terms for BUY
1. The line of the MFI indicator crosses level 20 three times: top-down (A), bottom-up (A-B), and again top-down (B-C).
2. At the time of the last crossing, the end of the line (C) is above point A.
3. The minimum of the candle opposite the point C of the MFI indicator is below the minimum of the candle opposite the point A of the MFI indicator.
4. The current candle on the price chart is below the level of the moving average indicator line without touching it.
Terms for SELL
1. The line of the MFI indicator crosses level 20 three times: from bottom to top (A), from top to bottom (A-B), and again from bottom to top (B-C).
2. At the time of the last crossing, the end of the line (C) is below point A.
3. The maximum of the candle opposite the point C of the MFI indicator is higher than the maximum of the candle, opposite point A of the MFI indicator.
4. The current candle on the price chart is above the line level of the moving average indicator and does not touch it.
Stoploss and Takeprofit
For purchases and for sales, the conditions for setting stop loss and take profit are the same but differ in size depending on the size of the candle. Stoploss should always be set twice the size of the candle on which the deal is made. Take profit is set at a distance of 4 times the size of the candle on which the trade is open.
Conclusion
The MFI Extreme Divergence H1 strategy cannot be called a strategy generating a large number of signals. Transactions are not very frequent. Nevertheless, it gives rare, but very profitable signals in percentage terms. You can apply this trading strategy to a large number of trading assets, and this compensates for its shortcomings in the number of signals.
