FX TECHNICAL ANALYSIS
a touch of the bottom band of the Keltner channel. We enter at that point for about a 3% profit once the trade is exited on a touch of the channel middle band.
Trade #3
Here we get probably our best trade setup of the ones listed. It’s a short trade in the context of the broader downtrend.
Price came up to the point of being both overbought according to the MFI and touched the top band of the Keltner channel. Once again, the trade was exited upon a touch of the middle band of the channel. This made a little over a 3% profit.
Trade #4
Here we took a third long trade. However, after a slight initial bounce, we did not get our exit signal (touch of the middle band). It fell a bit before eventually closing out according to this rule at a loss of 2.3%.
Overall, this system would have produced a net gain when aggregating the results of all four trades.
Conclusion
The money flow index is a momentum indicator that provides insight into how much money is flowing in and out of a security over time. It is designed for traders
56 FX TRADER MAGAZINE October - December 2018 Fig. 5 - Trade #4
looking for points of price reversal in a market and would not be a relevant addition to a trend following system.
It is recommended that the MFI be used in tandem with other price reversal indicators (e.g., Fisher
Transform, Keltner channels, Klinger volume oscillator) to filter false signals and better its accuracy.
A. Primer
Technical Analysis
Daytrading.com
Fig. 3 - Trade #3
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