Force index indicator

Psychology, Trading Tactics, Money Management. Can also select the Zero Line's value, color, line thickness and visual type Dashes are the default. When it is negative, the bears have control of the market.

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Elder's Force Index (EFI)

Another common strategy is to look at divergence of the EFI with the current price trend to gauge when a stock is likely to have a counter move, as the internals of the move are shaky. Please enable Javascript to use our menu! A big advance shows strong buying pressure, while a big decline insicator strong selling pressure.

Notice how the day Force Index is more volatile and jagged. Simply subtract the prior close from the current close and multiply by volume. If the current closing price is lower than the preceding one, the force is negative. The raw index is rather erratic and better results are achieved by smoothing with a 2-day or day exponential moving average EMA.

Force index

Bullish and bearish divergences can alert chartists of a potential trend change. Bigger ineicator warrant larger multipliers that influence the Force Index accordingly.

The higher this number, the more decimal points will be on the indicator's value. At its most basic, chartists can use a long-term Force Index to confirm the underlying trend.

I can however appreciate the fact that Alexander believed in his own analysis so much, that he was willing to associate his own name with his findings. As you can imagine, if we are talking about a stock with high volume, the EFI readings will undex pretty high. On the opposite side of the matter, a flattening force index could indicate a trend reversalif a high volume corresponds with only a small move in prices.

The trend in question, short-term, medium-term or long-term, depends on the Force Index parameters. Create a Winning Strategy: The timeframe can fofce adjusted by using a longer moving average and timeframe for the Force Index.

Force Index [ChartSchool]

Extent - A big advance in price shows high levels of buying pressure. Views Read View source View history. A bearish divergence can be confirmed with the Force Index moving into negative territory or a support break on the price chart. The day Force Index produces fewer zero line crossovers and these crossovers last longer. In order to use StockCharts. Third, volume plays a key role.

Acting when negative may improve the reward-to-risk ratio, but the correction could extend a few more days. Go long [L] on the bullish divergence.

This chart shows two versions of indicatr Force Index. The Force index falling below zero indicates that the bulls have lost control. Of particular importance are divergences between a day EMA of force index and prices, which correspond with precise points, indicating crucial turning points of the market.

Views Read Edit View history. From Wikipedia, the free encyclopedia.

Ultimate Guide to Force Index Indicator

The strength of the force is determined by a larger price change or by a larger volume. If the approximations is made with long moving average period 13the index shows the trends and their changes. As with frce indicators, traders should use the Force Index in conjunction with other indicators and analysis techniques.

This scan is meant as a starting point. The force index FI is an indicator used in technical analysis to illustrate how strong the actual buying or selling pressure is.

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