Demark Technical Indicator

Demarker Technical Indicator is used for comparing the most recent price level to the previous period’s price level to measure the demand of that asset.This is a good indicator to identify the risk involved and the levels at which investor wish to place a transaction
It is based on the comparison of the period maximum with the previous period maximum. If the current period (bar) maximum is higher, the respective difference between the two will be registered. If the current maximum is lower or equaling the maximumof the previous period, the naught value will be registered. This oscillator is bounded between -100 and +100 and, unlike many other oscillators, it does not use smoothed data.
The differences received for N periods are then summarized used as the numerator of the DeMarker. Then the numerator is divided by the same value plus the sum of differences between the price minima of the previous and the current bars. If the price minimum of the current period is higher than that of the previous, the nought value is registered. When the indicator is below 30, the upward price reversal should be expected. When the indicator rises above 70, the downward price reversal should be expected. Using longer periods when calculating the indicator helps to catch the long term market tendency. Indicators based on short periods let you plan thetransaction time so that it falls in with the major trend.
Generally, values above 60 are indicative of lower volatility and risk, while a reading below 40 is a sign that risk is increasing.
Prediction Algorithm:
1. Calculate DeMax (i): If HIGH(i) > HIGH(i – 1), then DeMax(i) = HIGH(i) – HIGH(i – 1), else DeMax(i) = 0
2. Calculate DeMin (i) If LOW(i) < LOW(i - 1), then DeMin(i) = LOW(i - 1) - LOW(i), else DeMin(i) = 0
3. Calculate DeMarker indicator : DMark (i) = SMA (DeMax, N) / (SMA (DeMax, N) + SMA (DeMin, N))
4. If DMark<30, predict BUY ElseIf DMark>70, Predict SELL
Where: HIGH (i) – current maximum price;
LOW (i) – current minimum price;
HIGH (i – 1) – previous maximum price;
LOW (i – 1) – previous minimum price;
SMA – simple moving average;
N – number of periods used in the calculation
Source
http://ta.mql4.com/indicators/oscillators/DeMarker