Stochastic Momentum Index (SMI) of Money Flow Index (MFI)

The Stochastic Momentum Index of Money Flow Index (SMI of MFI) was chosen as an Editors' Pick in April 2023, achieving over 2750 boosts to date.

The indicator is offered free of charge and can be freely modified for commercial or non-commercial use, as long as due credits are mentioned. The indicator can be accessed on the TradingView platform.

The SMI measures price momentum by comparing the current close to the high-low range over a period of time. The MFI measures buying and selling pressure using price and volume.

Combining the SMI and MFI provides a more comprehensive view of price direction and market strength compared to using either indicator alone. One way to do this is to use the MFI as an input to the SMI calculation instead of just price, to measure momentum based on money flow.

Key signals to watch:

🟢The SMI crossing above -40 is a potential buy signal, while crossing below +40 is a potential sell signal.

🟢Divergence between the SMI/MFI and price action can foreshadow potential trend reversals. Negative divergence (rising price but falling SMI/MFI) suggests weakening momentum, while positive divergence (falling price but rising SMI/MFI) indicates building momentum.

The SMI/MFI combination can be a valuable tool as part of a broader trading strategy, but should be used alongside other forms of analysis. Adjusting the indicator timeframes can help suit specific trading styles and goals.

In summary, while the SMI/MFI provides helpful insights into price momentum and strength, it is not a standalone trading solution. As the quote warns, underestimating one's opponents and not preparing sufficiently will lead to defeat. Traders must use the SMI/MFI wisely in combination with other tools and analysis to make sound trading decisions.

Key Features

• Hybrid Indicator: Combines the Stochastic Momentum Index (SMI) with the Money Flow Index (MFI), measuring momentum not just by price but also by buying and selling pressure.
• Enhanced Signal Detection: Uses the MFI as input for the SMI, enabling the identification of momentum shifts based on volume-weighted activity, not just price action.
• Customizable Periods: Flexible period adjustments for both MFI and SMI components, letting users tailor settings for different trading styles.
• Signal Line Crossover Alerts: Generates buy signals when the SMI crosses above -40 and sell signals when it crosses below +40.
• Divergence Detection: Highlights divergences between price and the SMI MFI, which may anticipate reversals or momentum changes.
• Visual Themes & Adjustments: Multiple color themes, gradient options, and transparency settings for clear chart visualization.
• Separate Settings for Histogram: Different parameters and timeframes for the histogram and oscillator, including multiplier for improved histogram readability.
• Multi-Timeframe Analysis: Option to choose different timeframes for combined analysis, inspired by advanced trading strategies.
• Rich Alert System: Eight types of alerts, including signal crosses, entries/exits in dynamic zones, and centerline crossovers for more precise monitoring.
• Trendline & Divergence Labels: Automatic labeling for divergences and trendline breakouts, with the ability to show/hide these labels as needed.
• Open-Source Transparency: Code is open-source, enabling review, adaptation, and further development by the trading community.

You can view and use the indicator on TradingView here: Stochastic Momentum Index (SMI) of Money Flow Index (MFI).