Disparity index with dynamic overbought and oversold areas
July 11, 2017, 5:08 PM
Indicators
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The Disparity Index is a well known indicator used to assess overbought and oversold areas. In this code I added some bands to represent the overbought/oversold areas.
Since the Disparity Index is closely related to RSI by using a EMA130 you would have, on a daily timeframe, also a quite accurate weekly RSI at hand.
Blue skies
//variables
//periodo=130
//tipo=1
//corr=2
//formulas
a=average[periodo,tipo](close)
dispidx=close-a
b=std[periodo](dispidx)
band=corr*b
//colours setup
if dispidx>band then
r=205
g=0
b=0
else
r=0
g=0
b=205
endif
if dispidx<-band then
r=0
g=205
b=0
endif
return dispidx coloured (r,g,b) as "DI",0,band as "upper limit",-band as "lower limit"
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Filename:
disparity-index-2.itf
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