Donald Dorsey has developed the Mass Index in order to catch the trend reversal points. The daily prices movements are used for this purpose. In case the movement is considerable the Mass Index goes up, otherwise if it is slight the Mass Index goes down.
It is important to keep an eye on "reversal bulge" that appears when the Mass Index exceeds 27 and then reduces lower than 26.5 on a 25-period chart.
In order to find out whether the reversal bulge gives buy or sell signal a 9-period Exponential Moving Average of prices is used. You should buy when the moving average decreases (as reversal anticipation) and sell while it rises in case a reversal bulge takes place.
The Mass Index calculates various values, even the exponential averages of the ranges, using a number of bars. After that, it works out the indexes and traces the results. Mass Index shows the direction in trending markets and forecasts possible direction changes of forex market.
The Mass Index line rising over the setup line and getting lower than the trigger line afterwards indicates a possibility of price reversing, which is called "a reversal bulge." It is impossible to find out the direction of the trend through the Mass Index but it shows potential reversals successfully.