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Developed by James Sibbet, the Demand Index is a combination of price and volume that appears to provide predictions of price changes. There are 6 rules when using the demand index:- weakness in price follows divergence between the demand index and price; after extreme peaks in the demand index, prices usually rally to new highs; tops are signalled by high prices and low demand index values; if the demand index goes below 0, a change in the trend has occurred; if it hovers near 0 for any time, price is weak; long term divergences indicate major tops or bottoms. To calculate this indicator is far too complex without special software, as 21 columns of data are required. As a lagging indicator, the demand index is of little use in day trading systems anyway, being more suited to longer term traders. |
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