The
Mass Index is a range oscillator, which was invented by Donald Dorsey.
It is designed to identify possible market extremes by comparing
range between daily high and low prices. The greater the distance,
the greater the volatility, and vice versa.
Usage:
It
is used to identify trend reversals. The Mass Index is a range oscillator
that uses changes in trading price and provides unique market reversal
forecasts that other indicators may miss. The
Mass Index attempts to identify reversals by comparing the trading
range between High & low prices for each period. A bulge in
the index line signals reversals.
This occurs when the 25 periods Mass Index rises above 27 and falls
back below 26.5. By calculating a 9 days exponential moving average,
go long if there is a reversal bulge & EMA points downwards,
whereas go short if there is reversal bulge and EMA points upward
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