A Smoothed Range Expansion Index with Confidence Bands

Summary

This indicator note describes a modified Range Expansion Index, an oscillator developed by Thomas DeMark to assess price strength and weakness and identify potential overbought or oversold areas. The described variant combines RSX calculations on high and low prices to produce a smoother reading. REI is presented as neutral during flat markets and more responsive around significant price highs or lows; its values range from negative to positive extremes.

The version adds shifted confidence bands to make crossings easier to interpret. The shift controls how far the bands are offset across bars, and the description says a positive minimum shift is needed for usable crosses; larger shifts require experimentation. Two color-change modes are available: one reacts to crossings of outer levels, while the default reacts to a middle, zero-like level. Color changes are framed as possible trend-start or trend-end signals, not confirmed trades. The note provides no empirical validation, parameter comparison, or performance results, so it does not establish predictive reliability.

Key ideas

• The Range Expansion Index is described as an oscillator for assessing price strength and weakness.
• This variant sums RSX readings based on highs and lows to smooth the indicator.
• Shifted confidence bands are intended to make indicator crossings easier to spot.
• Color changes can be based on outer-level crossings or a middle zero-like level.
• The signals are presented as potential trend changes, without performance evidence or validation.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.