Force index measures the bulls power while growth and of the bears while deceleration. This index was designed by Alexander Elder. The indicator is based on the price direction, it’s deviations and deals volume. Force Index may be used together with moving average or separately. In this case the short moving average points at the optimal time to open and to close positions. The large moving average forecasts probable trend change.
This indicator contains the following signals:
- Buy signal – when the force index is lower than zero with the up-going trend.
- Continuation of up-going trend appears when the indicator reaches new height.
- Sell signal appears when the force index is increasing to plus while the trend is decreasing.
- Continuation of the decreasing trend signal appears when the indicator is falling to a new level.
- Trend change appears when the force index is not changing positions for some period. It happens if the price changes have not backup of volume changes.
