The disparity index is generally considered as introduced by Steve Nison on his book 'Beyond Candlesticks'.
This indicator is used to measure the percentage change between a security price and its moving average. A DI positive or negative value at a given point indicates that the price is respectively rapidly increasing or decreasing at that point. A positive value for the disparity index is considered as a positive sign for the security, however if the indicator reaches overbought levels, a price reversal may occur. The same applies for negative values of the DI indicator.
The DI function takes as arguments the period over which the moving average is calculated, as well as the MA type:
- '_MaSma' stands for a simple moving average type.
- '_MaDema' stands for a double exponential moving average type.
- '_MaEma' stands for an exponential moving average type.
- '_MaKama' stands for a Kaufman adaptive moving average type.
- '_MaMama' stands for a Mesa adaptive moving average type.
- '_MaT3' stands for a triple exponential moving average type.
- '_MaTrima' stands for a triangular moving average type.
- '_MWma' stands for a weighted moving average type.
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