Force Index
Introduction
Section titled “Introduction”The Force Index Technical Indicator, developed by Alexander Elder, measures the Bulls Power at each increase and decrease in the market. It combines information about price trends, drops, and transaction volumes.
Using Moving Averages
Section titled “Using Moving Averages”While the index can be used as is, it is recommended to approximate it using Moving Averages. A short moving average (2 intervals) can help identify optimal entry and exit points. On the other hand, a long moving average (period 13) can reveal trends and their changes.
Characteristics of Market Movements
Section titled “Characteristics of Market Movements”The force of a market movement is determined by its direction, scale, and volume. A positive force is observed when the closing price of the current bar is higher than the preceding bar. Conversely, a negative force is observed when the current closing price is lower. The magnitude of the force increases with larger differences in prices and transaction volumes.