Bill Williams indicators
Market Facilitation Index (BW MFI)
How much the price moved per unit of volume, coloured by whether price movement and volume rose or fell.
The idea in plain words
If a little volume moves the price a lot, the market is "easy" to move in that direction. Comparing this efficiency with volume reveals four situations: a strong move (green), a fading move, a fake move and a pause before a breakout ("squat").
How it is calculated
Candle range divided by volume. Colour: green if both rose, brown if both fell, blue if the index rose but volume fell, pink if the index fell but volume rose.
BW MFI = (high − low) ÷ volume
Green: MFI ↑ volume ↑ Brown (fade): MFI ↓ volume ↓
Blue (fake): MFI ↑ volume ↓ Pink (squat): MFI ↓ volume ↑How to use it
- Green bars: join the move.
- Pink (squat) bars: a battle before a breakout; watch which way it breaks.
- Brown bars: interest is fading; the move may end soon.
Drawing conclusions
- Most useful at the edges of ranges and after strong moves.
Example
Near a resistance level the BW MFI prints a pink bar: heavy activity but little movement. The next candle breaks the level with a green bar.
Prices in examples are illustrative.
Watch out for
- On currencies, metals and CFDs there is no central exchange volume. The chart uses "tick volume", the number of price changes in each candle, which follows real activity closely but is not the number of contracts traded.
A little history
Bill Williams, "Trading Chaos" (1995).
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.