Understand Mass Index Warnings With Our Easy One-Pager – 2020 Edition

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The Mass Index is used to warn of a future price reversal. The theory behind the Mass Index is that reversals occur when the price range [high – low] increases (i.e. more volatility).

The chart below of the E-mini S&P 500 future shows the Mass Index warning of an impending price reversal:

 
mass index technical analysis shows potential price reversals

 

The components for a Mass Index reversal of trend, “Reversal Bulge” as the creator of the Mass Index, Donald Dorsey refers to it, are listed below:

  1. Mass Index rises above the trigger line (set at 26.5) and the setup line (set at 27).
  2. Mass Index then falls below the setup line. When the Mass Index falls below the trigger line, then a reversal of the prior trend is expected.

The Mass Index is presented as a useful technical tool that traders might use to time entry into bottoming markets.

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