# DMI Stochastic Extreme Refurbished

█ CONCEPTS

DMI Stochastic Extreme was originally published by Barbara Star, PhD, in TASC magazine of January 2013.
Basically it describes an improved version of the ADX DI+/DI- indicator, created by J. Welles Wilder.

In the setup described by the author, the DMI Oscillator is used together with a stochastic oscillator of DMI.
First, the DMI Oscillator is obtained by subtracting the minus directional movement indicator value (DI-) from the plus directional movement value (DI+).
The final result is the "DMI Stochastic Extreme" indicator, in which the stochastic oscillator is calculated. Only instead of using the price value, the stochastic is obtained through the DMI value.

█ Goals

The final indicator described by Barbara is the Stochastic Oscillator of DMI.
However, to use the DMI oscillator together (as described in the magazine), it is necessary to plot it in a separate indicator, which consumes screen space.
That's why the idea of ​​joining both the DMI oscillator and the DMI Stochastic Oscillator into one thing came up, optimizing the visualization.
Taking advantage of the fact that my hands are already dirty :), I created some fine adjustments.

█ HOW TO USE IT

Here are some examples:

1. With default params:

2. With custom DI Length of 21 (Histogram), DI Length of 13 (for Stoch Oscilator), Stoch Length of 5, and another theme.

3. Another params with less noise:

█ THANKS AND CREDITS

- Barbara Star (original creator)
- ucsgears (arrow logic)

(...continuing)

"Your accomplishments are the greatest gift you can leave for humanity, for your riches will create more riches for everyone. Let your generosity create opportunities for others to be happier."

Improvements:

- Price bars are blue when the DMI is above zero and red when it is below zero
- Price bars are yellow when DMI Stochastic creates a signal
- Price bars are lime when DMI Stochastic creates a signal inside the main trend (bullish or bearish)
- DMI histogram has been modified for a better appearance
- Opacity fill on overbought and oversough areas has been changed to zero, in order to eliminate excess colors and redundancy (this is not a casino).
(all this is customizable)

I needed to complement the concepts:

- "DMI" stands for "Directional Movement Index". The DMI Oscillator histogram identifies trends or divergences.
- "DMI Stochastic Extreme" is the stochastic derived from DMI. It is a momentum indicator, and can often even signal support and resistance.
- Basically it is suggested to use two strategies: a trend following strategy, or a counter-trend strategy.
- Trend following strategy: follow the trend signaled by the DMI oscillator. If the DMI histogram is blue above zero, signaling an uptrend, I should look for possible bullish pullbacks through Stochastic. And vice versa: if the histogram is red, below zero, indicating a downtrend, I should look for possible bearish pullbacks through Stochastic.
- Bullish Countertrend Strategy: when the DMI histogram is equal to or greater than +20, I should look for a fast decline through Stochastic when it points down through the arrow.
- Downtrend countertrend strategy: when the DMI histogram is equal to or less than -20, I should look for a fast rise through Stochastic, when it points up through the arrow.

Examples of support and resistance:

Countertrend example:

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