Demand Index

Demand Index combines price and volume in a special way, so it often serves as a leading indicator of price changes. The Demand index was developed by James Sibbet.

James Sibbet formulated six rules for interpreting the demand index:

  • A divergence between the demand index and prices signals an upcoming price reversal.
  • Extremely high values of the demand index often precede the formation of new price highs (the index is a leading indicator).
  • The combination of a new price high with a lower peak of the demand index usually falls on an important price peak (the index is a synchronous indicator).
  • Crossing of the zero level by the demand index usually occurs after a price trend reversal and serves as its confirmation (the index is a confirming indicator).
  • If the demand index constantly fluctuates around zero, the current price trend has weak potential and will not last long.
  • A significant long-term divergence between prices and the demand index indicates an important market top or bottom.

The indicator view in the chart.


The indicator has the following parameters:



Period

Buy/Sell Power - setting of the volume values calculation period.



Smooth

Buy/Sell Power - setting of the volume values smoothing period.

Moving Average - setting of the indicator values smoothing period.



Drawing
Panel - selection of the indicator location in the chart:

  • New panel
  • Chart

Indicator, Moving average

Show value - display of the indicator value on the price scale.

Show zero values - display of zero values.

Scale/Auto-scaling - if this option is on, the scale will be automatically calculated, based on the minimum and maximum indicator values, so that the indicator would fit in the chart.

Color

Visual type - visual setting of the indicator display in the chart:

  • Line
  • Histogram
  • Hash
  • Block
  • Cross
  • Square
  • Dots
  • Up arrow
  • Down arrow
  • Axis label
  • Hide

Line style - setting of the line display style:

  • Dot
  • Solid
  • Dash
  • Dash - dot
  • Dash - dot - dot

Width - setting of the indicator line width.

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