I was recently looking at the calculation for MFI - the money flow index.
The calculation is as follows (From Stockcharts):
* 1. Typical Price = (High + Low + Close)/3 * 2. Raw Money Flow = Typical Price x Volume * 3. Money Flow Ratio = (14-period Positive Money Flow)/(14-period Negative Money Flow) * 4. Money Flow Index = 100 - 100/(1 + Money Flow Ratio)
If you view the excel document, it displays a negative money flow as a day which has a lower typical price than the previous day's. Positive money flow is a day where the typical price has increased.
Now in my calculations I defined a positive money flow, when the closing price is higher (ie. a positive change) and a negative money flow, a day where the closing price is lower ( a negative change).
So which is correct, using TP or using change? and why?