Market Facilitation Index (BW MFI)

Market Facilitation Index (BW MFI) is calculated as follows:

BW MFI = (HIGH — LOW) / VOLUME

Where:
HHIGH — the highest price of the current bar; LOW — the lowest price of the current bar; VOLUME — volume of the current bar.

Signals:

• When both BW MFI and Volume rise at the same time, it means that the market is moving primarily in one direction and that more people are participating in the market (volume increases). It is a good time to be already in the market.
• When both BW MFI and Volume decrease at the same time, it means that traders' interest starts to fade. Often it occurs toward the end of the trend.
• When BW MFI is pointing higher and Volume is pointing lower, it means that the market primarily moves in one direction but there are no new participants to generate higher volume. Price movements are the result of speculation.
• When both BW MFI goes down and Volume goes up, it means that there is a battle between bulls and bears (large volume) and their forces are almost equal (the price does not change significantly). This typically occurs prior to a significant move in the opposite direction. Close attention should be paid to the direction that the price moves when breaking out of this slowdown. Bill Williams called this a squat bar.