Range Expansion Index (REI) Indicator is a momentum oscillator created by Thomas DeMark. It shows the relative strength of a currency pair based on the comparison of the recent price fluctuations and the overall price changes during a chosen period. It’s also used to trade stock and commodities.
The oscillator moves within −100 to +100, with the overbought and oversold areas marked above +60 and below −60. When the price reaches these levels, it means that the price will reverse soon. When the market is moving sideways, the indicator stays in the neutral zone.
If the indicator is used on low timeframes such as 5M or 15M, it’s recommended to increase the setting priod from 8 (standard) to 12 in order to clean out false signals and noise.
Don’t rely on REI’s signals only, it’s wiser to apply a trend filter like an EMA (50):
- Sell if REI moves above the +60 level with the price being below EMA (50).
- Buy if REI moves below the -60 level with the price being above EMA (50).
- File: Range-Expansion-Index.mq4
- Size: 3 Kb