Business, Legal & Accounting Glossary
The Mass Index serves as an indicator of upcoming price reversals by quantifying the difference between the high and low prices of a stock over time.
The mass index represents an n period sum of a ratio of an Exponential Moving Average of High-Low price divided by an Exponential Moving Average of the first average. The input parameters are (1) the period for the first Exponential Moving Average; (2) the period for the EMA of the first average and (3) the summation period for the ratio.
A reversal bulge occurs when a 25-period mass index rises over 27 and then falls below 26.5. The technical analyst should consider going long when the reversal bulge occurs and 9-period EMA of prices is trending down. Likewise, the technical analyst should consider going short when the reversal bulge occurs and 9-period EMA of prices is trending up.
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This glossary post was last updated: 23rd March, 2020 | 0 Views.