The DM Indicator is a technical analysis tool developed by Tom Demarker, that measures the demand for the underlying instrument by comparing the maximum prices of the current period with those of previous periods.
It is an oscillator composed of a single line that ranges between limits of 0 and 1 and has a base value of 0.5. As a general rule of thumb, the overbought level is usually set at 0.7 and the oversold level at 0.3.
At these levels reversals can be expected, making this a leading indicator.
The indicator is often used in combination with other signals.
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