Description

• Developed by Tom Demark, compares current price with two periods previous high and low prices
• It oscillates between -100 to 100, where reading above +50 means overbought and below -50 means oversold
• In order to make indicator movement more accurate and irresponsive to sudden quick price fall or rise, there are certain conditions to be met to qualify a value

Interpretation

• Readings below -50 indicate oversold and REI crossing it from below is a buy signal
• Readings above +50 indicate overbought and REI crossing it downward from top is a sell signal

Default Parameters Used/Inputs

• High Line
• Low Line
• Close Line
• Period

Returns/Output

Range Expansion Index value of the stock

Formula

REI = SUM(Value, N) / SUM(ABSValue, N)
where,
IF ( ( (HI>=LO-5 OR HI>=LO-6) AND (LO<=HI-5 OR LO<=HI-6) )
or
( (HI-2>=CL-7 OR HI-2>=CL-8) AND (LO-2<=CL-7 OR LO-2<=CL-8) ) ), then
Value = HI – HI-2 + LO – LO-2 & ABSValue= ABS(HI – HI-2) + ABS(LO – LO-2)