Range Expansion Index: Calculation and Overbought/Oversold Levels
Summary
This indicator note explains the Range Expansion Index (REI), a momentum oscillator attributed to Thomas DeMark. It compares selected changes in highs and lows with the absolute size of those changes over a defined lookback. Conditions based on prior highs, lows, and closes gate which price changes contribute to the numerator, while the denominator totals absolute high-low changes. The resulting ratio is scaled to range from −100 to +100. The supplied indicator implementation uses an eight-period setting and marks +60 and −60 as overbought and oversold reference levels.
The note presents the formula and code but provides no tests, market examples, or evidence that threshold crossings predict profitable trades. It characterizes REI as a way to assess directional strength and possible price extremes; those readings should be treated as indicator signals rather than standalone trade rules. The description is a summary of the indicator’s intended use, and it does not discuss asset-specific settings, false signals, or how to combine REI with risk controls.
Key ideas
- REI compares gated changes in highs and lows with their absolute movements over a lookback window.\nThe indicator is scaled between −100 and +100.\nThe provided implementation uses eight periods and highlights +60 and −60 as reference thresholds.\nThe note supplies a calculation and code example but no evidence of trading performance.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.