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| The '''range expansion index''' ('''REI''') is a [[technical indicator]] used in the [[technical analysis]] of [[financial market]]s. It is intended to chart the relative strength or weakness of a trading vehicle based on the comparison of the recent price changes and the overall price changes for the period.
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| The REI can be classified as a momentum [[Oscillator (technical analysis)|oscillator]], measuring the velocity and magnitude of directional price movements. The REI shows overbought/oversold price conditions by measuring the relation between the sum of "strong" price changes (such that form a trend) and all price changes for the period.
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| The REI is most typically used on a 8 day timeframe. It changes on a scale from −100 to +100, with the overbought and oversold levels marked at +60 and −60, respectively.
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| The range expansion index was developed by [[Thomas DeMark]] and published in his 1994 book, ''The New Science of Technical Analysis''.<ref>Thomas R. DeMark, ''The New Science of Technical Analysis'', ISBN 0-471-03548-3</ref>
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| ==Calculation==
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| Two sums are calculated for each day. One is the conditional sum of the "strong" price changes:
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| : <math> S1 = \sum_{j=1}^{k} n_j m_j s_j</math>
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| where <math>k</math> is the period of calculation (usually, 8), <math>n_j</math> is a first condition:
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| <code>if ((High[j – 2] < Close[j - 7]) && (High[j - 2] < Close[j - 8]) && (High[j] < High[j - 5]) && (High[j] < High[j - 6])) <math>n_j = 0</math>
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| else <math>n_j = 1</math></code>
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| <math>m_j</math> is a second condition:
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| <code>if ((Low[j – 2] > Close[j – 7]) && (Low[j – 2] > Close[j – 8]) && (Low[j] > Low[j – 5]) && (Low[j] > Low[j – 6])) <math>m_j = 0</math>
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| else <math>m_j = 1</math></code>
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| and <math>s_j</math> is the price change parameter:
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| : <math> s_j = High[j] - High[j - 2] + Low[j] - Low[j - 2],\!</math>
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| The second sum is calculated as following:
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| : <math> S2 = \sum_{j=1}^{k} |High[j] - High[j - 2]| + |Low[j] - Low[j - 2]|</math>
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| For each trading day the value of the indicator is calculated:
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| : <math> REI = \frac{S1}{S2} 100</math>
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| ==Interpretation==
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| According to [[Thomas DeMark]], price weakness is shown by the indicator when its value rises above level 60 and then declines below it. Price strength is shown when the REI goes below −60 and then rises above that level.
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| ==See also==
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| * [[Relative strength index]]
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| ==References==
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| {{reflist}}
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| {{technical analysis}}
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| [[Category:Technical indicators]]
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I am 24 years old and my name is Gabrielle Statton. I life in Villiers-Sur-Marne (France).
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