The DeMarker (DeM) indicator compares the maximum price values of the current and previous time intervals:
- When it’s above 70, rising prices are likely to start falling
- When it’s below 30, falling prices are likely to start rising
DeMarker is actually a simple moving average over a number of intervals:
- Use a large number of intervals to detect long-term trends
- Use a small number of intervals to detect short-term trends and enter the market at the least risky point
Calculation
DeMarker is calculated from the simple moving average (SMA) of two other values, DeMax and DeMin.
DeMarker = SMA( DeMax(J), N ) / ( SMA( DeMax( J ), N) + SMA( DeMin( J ), N ) )
N is the number of intervals used for averaging.
J is the current interval
DeMax compares the current and previous interval maximums (HIGH). If the current value is higher, DeMax is the absolute difference between the two values; if the previous value is higher, DeMax is 0.
If HIGH( J ) > HIGH( J – 1 )
DeMax = (HIGH( J ) – HIGH( J -1 )
else
DeMax = 0
Similarly, DeMin compares the current and previous interval minimums (LOW). If the current value is lower, DeMin is the absolute difference between the two values; if the previous value is higher, DeMin is 0.
If LOW( J ) < LOW( J – 1 )
DeMax = (LOW( J -1 ) – LOW( J )
else
DeMin = 0
