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Disparity Index

The Disparity Index is a momentum indicator that shows the direction of an asset's movement relative to a moving average. Similar to the Rate of Change (ROC) indicator, the Disparity Index generates important signals when it crosses the zero line, indicating an imminent rapid change in the trend. Extreme values in both directions may signal an imminent correction.

Price and its 20-period moving average with the gap between them shaded, and below the Disparity Index: the gap as a percentage of the average, around zero.
The Disparity Index measures how far price is from its moving average, in percent.

Formula: Disparity Index = ((Current Market Price - n-PMAV) / (n-PMAV)) × 100

where: n-PMAV = value of the n-period moving average. A positive value indicates that the price is rising, suggesting that the asset is gaining upward momentum. A negative value may indicate increasing selling pressure. A zero value means that the current price is exactly in line with the moving average.

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