Herrick Payoff Index (HPI) Indicator | Technical Indicators | Trade Futures

This indicator is used to analyze futures and options. The value returned by the function is a measure of the money flow into and out of the commodity to which the indicator is applied. The Herrick Payoff Index indicator requires the underlying security to have an Open Interest value.

Readings above zero indicate that interest in the market is growing. This is regarded as a positive (bullish) sign. Readings below zero can be interpreted as a negative sign (bearish). Another important occurrence is when the indicator moves to an extreme and then reverses sharply. This indicates that price reached a short-term buying or selling climax.

Additional Analysis:

A signal is generated when the Herrick Payoff Index (HPI) crosses above zero and this bullish signal is confirmed by a bullish key reversal, or when the HPI crosses below zero and this bearish signal is confirmed by a bearish key reversal.

A bullish key reversal is defined as Low < Lowest(Low, 9)[1] and Close > Close[1]

A bearish key reversal is defined as High > Highest(High, 9)[1] and Close < Close[1]

Additional References:

Pring, Martin. Market Momentum. Gloucester, VA. International Institute for Economic Research. 1993.

See also  Soymeal Seasonal Chart