Mass Index

Signals

Donald Dorsey looked for “reversal bulges” to signal a trend reversal. According to Dorsey, a bulge occurs when the Mass Index moves above 27. This initial bulge does not complete the signal, however. Dorsey waited for this bulge to reverse with a move back below 26.50. Once the reversal bulge is complete, traders should use other analysis techniques to determine the direction of the next move. Ideally, a downtrend followed by a reversal bulge would suggest a…

Ease of Movement

Interpretation

The example below shows the Nasdaq 100 ETF (QQQ) with the 1-period EMV in the lower indicator window. I am using EquiVolume bars because these show only the high-low range for the given period. The blue arrows show two small EMV values, one slightly positive and the other slightly negative. Volume on both days was above average, but the high-low range was modest or even small. This means prices had difficulty moving even though volume was…

Force Index

Interpretation

As noted above, there are three elements to the Force Index. First, there is either a positive or negative price change. A positive price change signals that buyers were stronger than sellers, while a negative price change signals that sellers were stronger than buyers. Second, there is the extent of the price change, which is simply the current close less the prior close. The “extent” shows us just how far prices moved. A big advance shows strong buying…

Money Flow Index (MFI)

As a volume-weighted version of RSI, the Money Flow Index (MFI) can be interpreted similarly to RSI. The big difference is, of course, volume. Because volume is added to the mix, the Money Flow Index will act a little differently than RSI. Theories suggest that volume leads prices. RSI is a momentum oscillator that already leads prices. Incorporating volume can increase this lead time.

Quong and Soudack identified three basic signals using the Money Flow…