 |
|
The Mass Index, by Donald Dorsey, is supposed to spot reversals in the trend by monitoring price volatility (the distance between the high and low). More volatility inplies a bigger Mass Index and vice versa. According to the inventor, the most important pattern is a "reversal bulge.", i.e. when a 25period Mass Index rises above 27.0 and then falls below 26.5, indicating a reversal in price. The major trend (bullish or bearish) doesn't matter. As a 'swing trading' indicator, this indicator is unlikely to be of much use when day trading. To calculate the Mass Index, calculate a 9 day EMA of the difference between the day's high and low prices; next calculate a 9 day EMA of the moving average you just calculated; next divide the first moving average by the second moving average; finally sum those values for the number of periods in the Mass Index (for example, 25 days). |
|
|||||||||||||
