What is DeMarker?
DeMarker is a technical indicator designed to identify overbought and oversold conditions in the market, similar to RSI or Stochastic. Developed by Jason Demark, it aims to provide more accurate signals by focusing on price range rather than closing prices. This makes it potentially less susceptible to whipsaws and false signals, especially in volatile markets. It's a bounded oscillator, meaning its values are constrained between 0 and 100.
How it Works
DeMarker calculates the difference between the highest high and lowest low over a specified period, then normalizes this difference to a scale of 0-100. It essentially measures the volatility of price movement. A higher DeMarker value indicates increasing upward momentum, while a lower value suggests increasing downward momentum. The core formula considers the range of price action, offering a different perspective than indicators based solely on closing prices.
Trading Signals
Generally, a DeMarker reading above 90 suggests an overbought condition, potentially signaling a sell opportunity. Conversely, a reading below 10 indicates an oversold condition, hinting at a possible buy opportunity. However, it's crucial to confirm these signals with other indicators and price action analysis. Look for divergences – when price makes new highs but DeMarker doesn't, or vice versa – as potential reversal signals.
Basic Settings
The primary setting for DeMarker is the period length, typically set to 14. Shorter periods make the indicator more sensitive to price changes, while longer periods smooth out the data. Experiment with different period lengths to find what works best for your trading style and the specific asset you're analyzing. Visual customization options, like line color and style, are also available in TradingView.