Disparity Index – DI
The Disparity Index (DI) is a technical momentum indicator that measures the percentage value of an asset’s current closing price relative to its moving average. Simply put, it helps compare the current market price to the moving average of the price over some time. A positive percentage indicates a rising price, while a negative percentage indicates a falling price. Traders use the DI to identify overbought/oversold market conditions of an asset, which can lead to sudden price reversals.
Whenever the disparity index crosses the zero line, the indicator generates very useful signals. A change in trend is imminent when the indicator crosses the 0 line. A price correction is inevitable when the indicator shows extreme values. The DI indicator shows extreme values because assets are falling into the overbought/oversold zone. Extreme values indicate that a trend reversal is imminent and traders should stop following the trend. Values above zero indicate an uptrend, while values below zero indicate selling pressure during the downtrend. Divergences can also be detected using the DI indicator. Whenever the indicator and the price do not move in the same direction, this indicates a divergence.
The indicator has one line:
- Disparity index
We have added these basic conditions:
- Disparity Index is rising/falling
- Disparity Index is above/below level
- Disparity Index crosses above/below level
Indicator is implemented for: MT4/MT5/Tradestation/ Multicharts
You can easily do your conditions in Custom blocks. More informations you can find here:
How to import custom indicators to SQX: https://strategyquant.com/doc/programming-for-sq/import-export-custom-indicators-and-other-snippets/