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Glossary of Technical Analysis Terms: D




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Glossary of Technical Analysis Terms: D

  • Demand Aggregate:

    The Demand Aggregate is used similarly as the Demand Index but adds Open Interest as a consideration in the formula. In its simplest terms, the system confirms price trends by analyzing concurrent Volume and Open Interest trends. For example, a rise in price, coupled with rising Volume and Open Interest figures, is considered a bullish indicator. Interpretations are made with respect to the relationship between the movement of Volume, Open Interest, and Price.

  • Demand Index:

    The Demand Index is a leading indicator which combines volume and price data in such a way as to indicate a change in price trend. It is designed so that at the very least it is a coincidental indicator, never a lagging one. The calculation of this index is relatively complex. This analysis is based on the general observation that volume tends to peak before prices peak, both in the commodity and stock markets.

  • Detrend :

    Detrend is simply another interpretation of a moving average. It provides a means of identifying underlying cycles not apparent when the moving average is viewed in its original form by effectively hiding the major cycles from view. The moving average line is drawn as a straight, horizontal basis line on the Detrend chart. Price bars are then re-positioned along this line depending on their relation to the moving average line.

  • Directional Movement Index:

    Directional Movement uses a rather complicated set of calculations designed to rate the directional movement of commodities or stocks on a scale from 0 to 100. For those traders who employ trend-following methods, commodities or stocks rating in the upper end of the scale would be attractive. Those using non-trending methods, commodities or stocks rating at the lower end of the scale should be considered for trading. At its most basic, the Directional Movement would affect trading in the following manner: Long positions would be taken when the "+DI" line crosses over the "-DI" line. Short positions would be taken when the "-DI" line crosses over the "+DI" line. Further components of this index are the ADX and ADXR lines.

 

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