Mass Index

The Mass Index, developed by Donald Dorsey, is a technical indicator designed to detect potential trend reversals by measuring the narrowing and widening of the trading range between daily highs and lows — specifically looking for a phenomenon Dorsey called a 'reversal bulge.' The indicator sums the ratio of a 9-period EMA of the high-low range to a 9-period EMA of that EMA, over a 25-period window. A reversal bulge occurs when the Mass Index rises above 27 and then falls back below 26.5 — this signal indicates that the trading range has expanded and then contracted, historically preceding a significant trend reversal regardless of the current direction. The Mass Index is unique in that it does not itself predict the direction of the reversal — a separate trend indicator is needed to determine whether to go long or short.