Home » Disparity Index

Disparity Index

« Back to Glossary Index

The Disparity Index is a technical indicator that measures the relative position of an asset’s most recent closing price to a specific moving average and reports the value as a percentage.

Traders commonly attribute this measurement to Steve Nison, based on his book, ”Beyond Candlesticks”.

disparity index

The Disparity Index can take either a positive or a negative value.

  • A positive value indicates that the asset’s price is rapidly increasing.
  • A negative value indicates that the price is rapidly decreasing.
  • A value of zero means that the asset’s current price is exactly consistent with its moving average.
disparity index example

Trading signals are generated when the Disparity Index indicator crosses over the zero lines. The crossing of the zero line acts as an early signal of an imminent rapid change in the trend, and therefore the price.

Extreme values in either direction may indicate that a price correction is about to occur.

Nison’s book suggests that the Disparity Index can indicate whether an asset is overbought (in the case of a positive value) or oversold (in the case of a negative.)

Since overbought and oversold levels are vulnerable to rapid price reversals, the Disparity Index is a good indicator of when following the trend of a given asset might be a dangerous proposition.


Parabolic describes a market that moves a great distance in a very short period of time, frequently moving in an accelerating Read more

Bitcoin Block

Blocks are data structures within the blockchain database, where transaction data in a cryptocurrency blockchain are permanently recorded. A block records Read more

Monetary Policy

Monetary policy refers to the actions taken by a nation’s central bank to influence the availability and cost of money and credit to Read more

XM Bonus