Force Index

The Force Index indicator, developed by Alexander Elder, combines price changes and volume to measure bullish and bearish market pressures.

To avoid erratic fluctuations, this indicator is smoothed by its Exponential Moving Average using a period generally ranging from 2 to 13 days.
The 2-day period is used to detect buying or selling pressure on short-term cycles, and the 13-day period for intermediate cycles.

Calculation Method

Force Index = Exponential Moving Average(V * (C - CP))

where:

• V: daily volume
• C: daily closing price
• C_P: previous day's closing price

Example

Interpretation

• When the Force Index indicator is above zero, it means bullish pressure dominates.
• Below zero, bearish pressure prevails.
• When the indicator fluctuates around zero, neither pressure dominates and therefore no trend exists.

The higher the positive value of the indicator, the stronger the bullish trend. A significant negative value of the indicator means that bearish pressure is very strong.