Range Expansion Index Continuation Trade Strategy

[datamonkey]

Fellow traders,

The attached pdf (page 6) includes a price action strategy derived from the famous technical analyst Tom Demark. This is his concept where he used the REI (Range Expansion Index) to find high probability setups in Forex, Futures and other markets.

Instead of the REI this is simulated using the good old Stochastic oscillator which mimics the REI almost perfectly! However the settings are adjusted to 5, 2, 2 with amended levels to recreate it.

As you will see it pinpoints entries for minor rallies in a downtrend and sell-offs in an uptrend for trend continuation trades.

I use it on 4 hour Forex spot charts and ES 1500 tick charts with good success combining Bollinger theory from John Bollinger himself.

Have a look and let me know if you have any questions or how you get on!

I will try and post some chart examples here when I get a moment...

[Yang Liu]

thank you very much!

[Judy Mank]

I would be talking on the range expansion index (REI). It could be seen that in order to calculate the Range Expansion Index, you should first sum all respective differences of high of the current day and the one that existed two days before along with the differences of lows, the one of the current day and the one that existed two days earlier. This would give you the value that would be positive or negative referring to the fact if the high and low of the current day are higher or lower than they used to be two days before.