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Demand Index was created by James Sibbett and uses complex code to easily handle the interpretation of volume and price in combination.

Understanding volumes has never been an easy task, but this beautiful programming sample definitely makes it easier.

There are several ways for the indicator to be useful for both traders and investors.

Having studied many technical indicators for many years, I have formed the opinion that the Demand Index is one of the kings in finding significant divergences.

If the market price reaches a new high, but the Demand Index does not reach it, this is a bearish divergence. There are some radical photos on my website showing extreme cases of divergences in order to help you understand what to look for. The larger the divergence difference, the more significant it is in the units of the pointer for predicting the trend change event.

The intersection of the zero line is an indicator of total sales or purchases for the entire specified period, it is worth considering that in this way the indicator acts as a lagging indicator, and in order to get meaningful results, longer intervals with some smoothing are required. For these purposes, I suggest intervals of at least >40 with some smoothing >>5 added to reduce false signals.

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To turn on the zero crossing alert, click on the indicator properties, input parameters, use of warnings = True.

When the alert is triggered, a window will appear showing the name of the symbol and the message “Demand Index crossed the zero line from above (or below)”.

The default value for alerts is set to false.

Despite the above, it is important to understand the difference between the movement of a trend change with a “real zero crossing” and a false signal.

If the Demand Index is stuck and hovers around zero, it does not mean anything at all, but a decisive breakthrough that stands out is the kind of movement that you need to look for. Prices are driven by volume, causing an imbalance of supply or demand, creating a situation where there are more aggressive buyers or sellers leading to market movement in the direction of the indicator.

This product is designed to display exactly this information in the clearest possible way.

When a range or congestion zone is visible in the Demand Index indicator, it is worth noting that when a decisive breakdown occurs, it is likely to be followed by a breakdown in the same direction in the underlying market.

As with what was said earlier, it is also important to know the difference between “noise” and a real breakdown pattern, this should be obvious, and if you have to spend time asking yourself if this is real, then this is most likely not a signal to act on.

When an extreme upper peak appears in the Demand Index, it implies a serious purchase, and this is usually followed by one or more upward movements to a higher peak of the market.

The same is true in the opposite case, when there is a big peak directed downwards, it means that the market will make another new lower low.

Often these movements are followed by divergence, which then leads to a trend reversal.

When the market trend continues to decline, the Demand Index trend continues to go up, this is a sign of the formation of a large bottom, and vice versa.


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