Developed by Ron Meisels, this indicator is a simple but often very accurate overbought/oversold indicator. It is calculated by counting the number of days for which the instrument price has risen or fallen over the selected moving period (usually 10 days). The number of days when the price fell is subtracted from the number of days when the price rose. The result is plotted as a positive or negative number on the chart.
The indicator oscillates around zero line in a similar way to a momentum chart with significant peaks and troughs corresponding to overbought and oversold levels. Like most other momentum indicators, a single parameter is entered to determine the number of days in the moving calculation.
When a 10 day moving period is used, overbought and oversold levels are determined at +6 and –6 respectively. A trade is often made when the indicator and the price begin to move back from a peak or trough outside the overbought/oversold level.
This indicator can however give good results if a longer term perspective is required and a longer moving period is chosen. In this case, the limits for overbought/oversold levels will need to be modified. The determination of these levels can best be achieved by viewing an earlier part of the price history and comparing this with the reading on the Meisels indicator.
Calculation:
If Close>PrevClose then m=1
If Close<PrevClose then m=0
PrevClose = The Previous Closing Price
m = Daily Price Change
Inputs:
Period = 10
Indicates time period(the number of days for daily analysis, the number of weeks for weekly analysis, etc.).
Indicator Type: Trend