Mass Index (MI)

The Mass Index is a volatility indicator developed by Donald Dorsey that identifies trend reversals by measuring the narrowing and widening of the range between high and low prices. Unlike most volatility indicators, the Mass Index is specifically designed to detect "reversal bulges" — situations where the trading range widens significantly before a trend reversal occurs.

The Mass Index uses a double-smoothed EMA of the high-low range:

1. Single EMA = EMA(High - Low, 9)
2. Double EMA = EMA(Single EMA, 9)
3. EMA Ratio  = Single EMA / Double EMA
4. Mass Index = Sum(EMA Ratio, 25)

The indicator sums the ratio of the single EMA to the double EMA over 25 periods. The key signal is the "reversal bulge" pattern.

• 27.0 — Bulge threshold: when Mass Index rises above 27, a potential reversal setup begins
• 26.5 — Trigger level: when Mass Index drops back below 26.5 after exceeding 27, the reversal signal fires
• ~25.0 — Baseline: normal reading when range is stable

Buy signals

• Mass Index rises above 27 then drops below 26.5 while price is in a downtrend (bullish reversal)
• Combine with a 9-period EMA crossover: buy when the bulge trigger fires and price crosses above the 9 EMA

Sell signals

• Mass Index rises above 27 then drops below 26.5 while price is in an uptrend (bearish reversal)
• Combine with a 9-period EMA crossover: sell when the bulge trigger fires and price crosses below the 9 EMA

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 25 | Summation period for Mass Index | | EMA Period | 9 | EMA smoothing period for high-low range |

| Condition | Description | |-----------|-------------| | MASS_INDEX(25) > 27 | Range expansion detected (bulge forming) | | MASS_INDEX(25) cross_under 26.5 | Reversal bulge trigger | | MASS_INDEX(25) > 26.5 | Elevated range — watching for bulge | | MASS_INDEX(25) < 25 | Normal range, no reversal signal |

• The Mass Index does not indicate direction — only that a reversal is likely; use trend direction to determine buy vs. sell
• The reversal bulge (above 27 then below 26.5) is the primary signal — raw values above/below are less meaningful alone
• Mass Index works best on daily timeframes for swing trading
• Combine with a moving average crossover to confirm the reversal direction
• False signals occur in choppy markets — use additional confirmation filters
• The indicator is relatively rare among retail traders, giving it potential edge in less crowded signal space