MFI Extreme Divergence Strategy

When price makes a new extreme but money flow does not, pay attention.
This plan hunts divergence between Price and MFI (14) at overbought/oversold extremes and requires a clean trigger back through structure.

Tools

• MFI(14) with zones: ≥ 80 overbought, ≤ 20 oversold.
• Structure levels: prior swing highs/lows and micro‑supports/resistances.
• ATR(14) for stop & position sizing.

Signal definition

• Bearish divergence: price prints a higher high, MFI prints a lower high near/above 80.
• Bullish divergence: price prints a lower low, MFI prints a higher low near/below 20.

Entry trigger

1. Mark the divergence and the decision level (last minor swing).
2. Enter on a close back through that level (engulfing/rejection).
3. If no trigger within 3–5 bars, cancel the setup.

Stop Loss

• Beyond the extreme wick of the divergence leg or ATR(14) × 1.5–2.0.
• Consider spread/volatility buffer on fast pairs.

Take Profit

• First target: back to mean/structure (e.g., mid‑range or last base).
• R‑based: take partial at 1.5R–2R, trail remainder behind micro‑swings.

Filters & notes

• Avoid trading directly into major news (NFP, CPI, rate decisions).
• Higher timeframes (H4/D1) produce fewer but cleaner signals.
• Risk ≤ 1% per trade; one active position per symbol.