Disparity Index Calculator
Prices rarely sit exactly on their moving average. The Disparity Index measures how far the current price has stretched above or below it, expressed as a percentage, and that stretch is one of the oldest momentum signals in technical analysis, introduced by Steve Nison in “Beyond Candlesticks.”
The Disparity Index Calculator below computes the index from the current price and the n-period moving average value, then interprets the reading with the standard signal bands: strong bullish, bullish, neutral, bearish, and strong bearish.
How far price has stretched from its moving average, with signal interpretation.
Signal bands: above +10% strong bullish, +5% to +10% bullish, -5% to +5% neutral, -10% to -5% bearish, below -10% strong bearish.
The formula
Disparity Index = ((Current Price – n-Period Moving Average) / n-Period Moving Average) x 100
A positive value means price sits above its average (bullish momentum); a negative value means it sits below (bearish momentum). Zero means price equals the average exactly. If a stock closes at 112 with a 14-day moving average of 100, the index is ((112 – 100) / 100) x 100 = +12%, a strong bullish stretch.
How traders read it
Extreme levels: readings beyond +10% suggest overbought conditions and beyond -10% oversold, places where mean reversion often begins. Zero-line crossovers: crossing from negative to positive is a bullish signal; crossing down is bearish. Divergence: if price makes a new high but the index makes a lower high, momentum is fading, a classic reversal warning. Trend strength: persistently positive readings mark a strong uptrend; oscillation around zero marks chop.
Worked example
Current price 112, 14-period moving average 100. Deviation: +12. Index: (12 / 100) x 100 = +12.00%, a strong bullish signal. If the price instead sat at 92 against the same average, the index would be -8.00%, a bearish signal.
What other pages miss
Every top-ranking page documents this indicator; none offers a working calculator. Guides explain the formula, but traders still do the division by hand or in a spreadsheet. This is the only interactive Disparity Index tool in the results, with the documented +-5% and +-10% signal bands built in and the period presets (10, 14, 20) traders actually use.
Honest limitations
The Disparity Index is computed from past prices, so it lags fast moves. In choppy, sideways markets it whipsaws across the zero line and generates false signals. It works best alongside other confirmation, such as RSI, MACD, or volume, and with risk management on every trade. A stretched reading says price is far from average; it never says when price will come back.
FAQs
What is the Disparity Index?
A momentum indicator showing the percentage difference between the current price and a moving average. Positive means above the average; negative means below.
What moving average period should I use?
14 is the common default. Shorter periods (10) react faster; longer ones (20) are smoother. Match the period to your trading timeframe.
Should I use SMA or EMA?
Either. The formula works with simple, exponential, or weighted averages; just be consistent, because the reading depends on which average you feed it.
What does a zero reading mean?
The price equals the moving average exactly. Crosses through zero are watched as trend-change signals.
Is +10% always a sell signal?
No. In a strong trend, price can stay stretched for a long time. Extreme readings warn of overbought conditions; they do not guarantee an immediate reversal.
What is divergence in the Disparity Index?
When price makes a new extreme but the index does not follow, momentum is weakening. Bullish divergence (lower price low, higher index low) and bearish divergence (higher price high, lower index high) both warn of reversals.
Can I use it on crypto or forex?
Yes. It applies to any instrument with a price series: stocks, crypto, forex, commodities.