DeMarket (DeM) Indicator
Interpreting a DeMarket IndicatorUsing the DeMarket indicator would show potential overbought and oversold conditions in the market. It is an oscillator measured between a band between 0.0 and 0.1 or (0 and 100). When the price movement reaches 0.7 or above, it would suggest a decrease in volatility and a price drop. When the price movement reaches 0.3 or below, this would indicate a chance that the price could rise.
Formula for calculating the DeMarker Indicator
The DeMarker Indicator Formula is the amount of all possible price increase during a particular time frame (indicated as the letter “I”) and is divided by its minimum value:
The DeM has two components which are:
DeMax: which compares the recent high point to the previous ones.
[DeMax(i)] is calculated as follows:If high(i) > high(i-1) , then DeMax(i) = high(i)-high(i-1), otherwise DeMax(i) = 0 DeMin: which compares the recent high point to the previous ones. [DeMin(i)] is calculated as follows: If low(i) < low(i-1), then DeMin(i) = low(i-1)-low(i), otherwise DeMin(i) = 0 Then, the value of the DeMarker is calculated as: DMark(i) = SMA(DeMax, N)/(SMA[DeMax, N]+SMA[DeMin, N]) Where: SMA – Simple Moving Average N - Number of periods used in the calculation
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