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DeMarker Reversals and Exhaustion Zones

$100.00
DeMarker Reversals and Exhaustion Zones

DeMarker Reversals and Exhaustion Zones

$100.00
description
The DeMarker values oscillate within the 0 - 100 range(typical range is {0,1}, but we multiplied the scale by 100 for easier visualization). When the DeMarker reaches higher values, it means that the uptrend is approaching the point of exhaustion and traders can expect a downwards reversal soon. The opposite is true for lower values. For this reason, the DeMarker is considered a leading indicator, as it forecasts upcoming price movements.

Users can set the upper and lower bounds, but default values are 29 for the lower line and 73 for the upper. As mentioned, traders should expect reversals whenever the DeMarker value crosses above/below either threshold.

An example of how to use the DeMarker would be to remain in a long position until the DeMarker crosses above the upper pink line. At this point, rational traders will see this as a sign that the security is has reached an overbought/exhausted state. If they want to play it safe, they can decide to exit their position as soon as the DeMarker crosses that upper threshold. Another option is to remain in the position until the DeMarker crosses back below the upper pink line. This could result in a more profitable trade, but comes with increased risk.

The Chart:
The DeMarker is plotted as the blue oscillating line. When it crosses above the upper pink threshold, it turns red signaling it is in an overbought state. Conversely, the DeMarker line turns green when it crosses below the lower green line signaling that an oversold state has been reached and an upwards reversal is approaching.

Buy signals are displayed using vertical green highlight lines, and sell signals are represented by vertical red highlight lines. Users can choose whether signals are plotted on the chart in the input option menu.

This study includes both the option to display repeat signals and alerts.