DeMarker Indicator (DeMarker)
The DeMarker indicator, or DeM, is one of the technical analysis tools designed by Tom DeMark. Its purpose is to identify overbought and oversold conditions and predict price reversals. Unlike many oscillators that focus on closing prices, DeMarker uses highs and lows to measure trend strength.
History and Design Philosophy
Tom DeMark, a prominent financial market analyst, introduced this indicator in the 1990s. The philosophy behind its design was to focus on price behavior at extremes (highs/lows) to detect signs of trend weakness or strength before reversals occur.
DeMarker Calculation Formula
The basic formula of DeMarker is as follows:
- If
High_current > High_previous→DeMax = High_current - High_previous - If
High_current ≤ High_previous→DeMax = 0 - If
Low_current < Low_previous→DeMin = Low_previous - Low_current - If
Low_current ≥ Low_previous→DeMin = 0
Then, for a period n (e.g., 14 days):
DeM = Sum(DeMax_n) / [Sum(DeMax_n) + Sum(DeMin_n)]
The final value oscillates between 0 and 1. Values below 0.3 indicate oversold conditions, while values above 0.7 indicate overbought conditions.
How to Use in Trading
- Overbought: Value above 0.7 → Possible bearish reversal
- Oversold: Value below 0.3 → Possible bullish reversal
- Breakout Confirmation: Combine with other tools to identify valid breakouts
Comparison of DeMarker and RSI
Feature | DeMarker (DeM) | RSI |
|---|---|---|
Calculation Basis | Candle High/Low | Closing Price |
Range | 0 to 1 | 0 to 100 |
Overbought | Above 0.7 | Above 70 |
Oversold | Below 0.3 | Below 30 |
Sensitivity to Volatility | Lower than RSI | Higher |
Main Application | Identifying reversals and breakouts | Measuring trend strength |
Additional Notes and Recommendations
- DeMarker performs better in ranging markets.
- Combining it with indicators such as MACD or moving averages increases analysis accuracy.
- On higher timeframes (daily or weekly), it provides more reliable signals.
Download DeMarker Indicator by Tetrabit
This indicator has been carefully processed into a simple version. Compared to RSI, it works much faster and alerts you to major trend events in advance.
Divergences in this indicator work very intelligently, provided you master it and practice. With practice, you will see that divergences in this indicator are more precise and closer to reality than MACD and RSI.
Examples of its performance can be seen in the images below.
Download DeMarker Indicator – Tetrabit Version
Download the DeMarker indicator from here.
Installation Guide
Extract the text file from the compressed folder, paste it into the Pine Script section of TradingView, and add it to the chart.
