Demand Index

Modified on Fri, 04 Aug 2023 at 01:54 PM

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 andprices signals an upcoming price reversal.
  • Extremely high values of the demand indexoften precede the formation of new price highs (the index is a leadingindicator).
  • The combination of a new price high with alower 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 demandindex usually occurs after a price trend reversal and serves as itsconfirmation (the index is a confirming indicator).
  • If the demand index constantly fluctuatesaround zero, the current price trend has weak potential and will not lastlong.
  • A significant long-term divergence betweenprices 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.

Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select atleast one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article