Expansion Index

What is the expansion index?
The expansion index is a concept that charts the relative strength or weakness based on the comparison of recent price changes and overall prices changes for the period.

It can be used as an momentum oscillator and show overbought or oversold price conditions by measuring the relation between the sum of "strong" price changes (which can form trends).

The Expansion Index is most typically used on an 8 day timeframe. It changes on a scale from −100 to +100, with the overbought and oversold levels marked at +60 and −60, respectively.

What about this indicator?

This indicator basically shows the rate of expansion from zero, but also has other uses apart from finding over bought or over sold territory.

Scenarios:

• Lets say you are identifying a contraction zone (low volume zone of candles), you can further confirm the contraction if the Index is at or near 0, in this case it might have more strength
  and play out more accurately the contraction and expansion.
  
  
• Once the Expansion begins and price expands from the 0 level you can determine if its overbought which would be around the 1.00 Level or Oversold which would be at around the -1.00 Levels, and a reversal can follow out.
  
  
• With the rate of change line you can identify trends in market and when reversals will start.
  

This indicator is best used with contraction, expansion, and trend principles also known as the Forex Master Pattern, as it was for what this specific indicator was designed for.

Thanks to NNAMDERT for writing this indicator and giving full rights. :)

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