Mass index: Difference between revisions
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The '''mass index''' is an indicator, developed by |
The '''mass index''' is an indicator, developed by Donald Dorsey, used in [[technical analysis]] to predict trend reversals. It is based on the notion that there is a tendency for reversal when the price range widens, and therefore compares previous trading ranges (highs minus lows). |
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Mass index for a commodity is obtained by calculating its |
Mass index for a commodity is obtained by calculating its [[moving average (finance)#Exponential moving average|exponential moving average]] over a 9-day period and the exponential moving average of this average (a "double" average), and summing the ratio of these two over a given number of days (usually 25). |
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: <math>Mass = Sum[25] \; of \; { EMA[9] \; of \; (high-low) \over EMA[9]\,of\,EMA[9] \; of \; (high-low) }</math> |
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| ⚫ | According to |
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Generally the EMA and the re-smoothed EMA of EMA are fairly close, making their ratio is roughly 1 and the sum around 25. |
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{{finance-stub}} |
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| ⚫ | According to Dorsey, a so-called "reversal bulge" is a probable signal of trend reversal (regardless of the trend's direction). Such a bulge takes place when a 25-day mass index reaches 27.0 and then falls to below 26 (or 26.5). A 9-day prime moving average is usually used to determine whether the bulge is a buy or sell signal. |
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This formula uses intraday range values: not the "true range," which adjusts for full and partial gaps. Also, the "bulge" does not indicate direction. |
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== References == |
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<references/> |
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{{technical analysis}} |
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Latest revision as of 12:01, 26 July 2024
The mass index is an indicator, developed by Donald Dorsey, used in technical analysis to predict trend reversals. It is based on the notion that there is a tendency for reversal when the price range widens, and therefore compares previous trading ranges (highs minus lows).
Mass index for a commodity is obtained by calculating its exponential moving average over a 9-day period and the exponential moving average of this average (a "double" average), and summing the ratio of these two over a given number of days (usually 25).
![{\displaystyle Mass=Sum[25]\;of\;{EMA[9]\;of\;(high-low) \over EMA[9]\,of\,EMA[9]\;of\;(high-low)}}](https://wikimedia.org/enwiki/api/rest_v1/media/math/render/svg/83bb4433603a5b6024fd56b65f0996a9e504a190)
Generally the EMA and the re-smoothed EMA of EMA are fairly close, making their ratio is roughly 1 and the sum around 25.
According to Dorsey, a so-called "reversal bulge" is a probable signal of trend reversal (regardless of the trend's direction). Such a bulge takes place when a 25-day mass index reaches 27.0 and then falls to below 26 (or 26.5). A 9-day prime moving average is usually used to determine whether the bulge is a buy or sell signal.
This formula uses intraday range values: not the "true range," which adjusts for full and partial gaps. Also, the "bulge" does not indicate direction.
References
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