The DeMarker Indicator for MetaTrader 5 (MT5) is a momentum-based trend indicator designed to measure market demand and identify potential reversal zones. It is ideal for intraday Forex and stock traders who rely on accurate overbought/oversold readings and trend strength analysis.
Developed by Tom DeMark, this indicator compares the most recent price action to previous periods to determine whether buying or selling pressure is increasing. It works similarly to the RSI (Relative Strength Index) but provides faster and more precise reversal signals, especially in volatile markets.
In addition to identifying trend reversals, the DeMarker indicator also detects bullish and bearish divergences, which signal early trend exhaustion or continuation.
The DeMarker (DeM) indicator is displayed in a separate window below the main price chart as a single oscillating line between 0 and 1.
The 0.7 level represents an overbought zone, suggesting potential bearish reversals.
The 0.3 level indicates an oversold zone, signaling possible bullish reversals.
These threshold levels help traders identify when the market is likely to reverse direction or when momentum is strengthening.
When the DeMarker line rises above 0.3 from below, it suggests that the bearish phase is weakening and the market may begin a bullish trend.
Entry: Open a buy position when the indicator crosses above 0.3.
Stop Loss: Place below the most recent swing low.
Exit: Close when DeMarker approaches or falls from 0.7.
Example:
In a EUR/USD chart, when price tested support at 1.1132 and the DeMarker line crossed above 0.3, it confirmed a bullish momentum shift. A bullish pin bar followed, providing an ideal buy entry confirmation.
When the DeMarker line falls below 0.7, it indicates that the bullish pressure is fading, and sellers may take control.
Entry: Enter a sell position when the line drops below 0.7.
Stop Loss: Above the last swing high.
Exit: When the indicator nears 0.3 or starts turning upward.
The DeMarker indicator is also highly effective in spotting divergences, which occur when the indicator’s direction contradicts the price movement.
Bullish Divergence: Price makes lower lows while DeMarker makes higher lows → Expect a bullish reversal.
Bearish Divergence: Price makes higher highs while DeMarker makes lower highs → Expect a bearish reversal.
Divergences are often early signs of trend exhaustion and can be used to anticipate major market turning points.
While DeMarker provides reliable momentum signals, combining it with other tools enhances accuracy:
Use support and resistance levels or trendlines to confirm potential reversals.
Pair with candlestick patterns (e.g., pin bars, engulfing candles) for entry validation.
Combine with moving averages to identify the dominant trend direction.
This multi-layered approach helps avoid false signals and improves trade precision.
Accurate Momentum Reading: Measures real market demand with precision.
Non-Repainting: Signals remain stable after candle closure.
Detects Divergences: Helps identify early reversal or continuation signals.
Ideal for Intraday Trading: Works effectively on M15, M30, and H1 charts.
Versatile Application: Suitable for Forex, stocks, and commodities.
Beginner-Friendly: Easy to interpret with clear overbought/oversold levels.
Avoid trading during sideways/choppy markets where false signals are more frequent.
Always confirm signals with price action or volume-based indicators.
Use stop losses to manage risk effectively in volatile conditions.
Consider the broader trend context before entering a trade based on oscillator readings.
The DeMarker Indicator for MT5 is one of the most efficient tools for identifying market momentum, reversals, and divergences. It helps both beginner and advanced traders recognize when an asset is overbought or oversold and anticipate trend changes with confidence.
By combining DeMarker with candlestick patterns, trendlines, and support/resistance levels, traders can significantly improve their entry and exit accuracy.
Download the DeMarker Indicator for MT5 today from IndicatorForest.com and start using it to master professional Forex and stock trading strategies.
Published:
Nov 06, 2025 11:54 AM
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