Technical Analysts will usually view RSI and MFI Divergences favourably. Such patterns usually mean impending reversals.
RSI measures the values of up days versus the values of down days. If RSI is increasing, it means the up values are greater than the down values. MFI is a similar indicator. The difference is that it takes volume into account and weights the values based on the daily volume.
So MFI is a much more powerful indicator than RSI. An increasing MFI literally means more money has been flowing into the stock than out.
From last week, I have managed to spot a number of MFI Divergences. Here are a few charts:
In the case of People's Food, it formed a base with heavy volume and was one of the first few stocks to reverse its bearish stance. I look forward for the gap to be covered.
Next week will be an exciting week.
Technorati Tags: chart