A leading volume indicator that dissolves price and volume into a single line, charting the tug of war between buying and selling pressure around a zero center. It often writes the next direction before price reveals it.
The Demand Index was devised by James Sibbet as a leading volume-based indicator.
Its defining trait is that it fuses two separate pieces of information, price and volume, into a single line. Most volume tools accumulate volume itself, but the Demand Index combines the size of each bar's move with its volume to extract two quantities: buying pressure (BP) and selling pressure (SP).
It then draws the tug of war between those two as a single oscillation that swings around zero.
Above zero, buying pressure has the upper hand. Below zero, selling pressure does. Each time the line crosses zero, from positive to negative or the reverse, it announces that control of the market has changed hands.
The other face of the Demand Index is that it tends to lead price. Volume is the quantity of conviction, and the real intent of participants seeps into volume before it shows up in the quoted price. The Demand Index amplifies that seepage and can point in a direction a step ahead of price.
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