Disparity Index Forex Indicator
The Disparity Index forex indicator for MetaTrader 4 is a technical momentum that links market price to a time-specific moving average of the prices in the market.
Chartists tend to use the disparity index as a tool to spot signals of trend strength and the likelihood of an impending exhaustion.
Other traders and analysts deploy the Disparity Index as a tool for defining oversold and overbought regions for a particular asset.
An asset is said to be overbought when the index yields a value that is greater than or equal to the upper bound level, and it is said to be oversold when the index returns a value that is lower than the lower bound level.
The Disparity Index indicator is based on the correlation between a current trading price and its most recent closing price.
Just like other momentum indicators, the Disparity_Index indicator is most suited when used along with other tools when a trader is trying to spot possible reversals or confirm a trend.
The price of a currency pair may spike or drop quickly within minutes, if not seconds. The Disparity_Index indicator is designed to gauge just what is tagged too severe of a spike or drop, offering simplicity in a condition that might otherwise be perceived as random.
This trading indicator assumes that prices are sensitive to obsessive sessions of buying or selling, even within a trend.
The Disparity_Index indictor can be used to sort for continuation pattern during short term or a total reversal in trend in the long term.
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (DispPeriod), Colors, width & Style.
Time frames: 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Type: momentum oscillator