Force Index
Quick Definition
An oscillator developed by Alexander Elder that measures the power behind price movements using price change, direction, and volume.
Key Takeaways
- Force Index combines price change, direction, and volume into a single oscillator.
- The 2-period EMA version finds short-term entries; the 13-period version shows intermediate trend direction.
- Divergences between Force Index and price are powerful reversal warning signals.
What Is Force Index?
The Force Index, created by Alexander Elder, quantifies the force or power behind every price movement by combining three essential elements: direction (up or down close), magnitude (size of price change), and volume. The raw Force Index is calculated as (Today's Close − Yesterday's Close) × Volume. This value is then smoothed with an exponential moving average — typically 2-period for short-term signals or 13-period for intermediate trends. A positive Force Index indicates buyers are in control, while negative values show seller dominance. The 2-period EMA identifies short-term entry points (pullbacks to zero in uptrends, bounces to zero in downtrends), while the 13-period EMA reveals the intermediate trend direction. Divergences between the Force Index and price often precede reversals, making it valuable for both trend-following and counter-trend strategies.
Force Index Example
- 1The 13-period Force Index turned positive after three months of negative readings, confirming that the intermediate trend had shifted from bearish to bullish — a strong buy signal.
- 2During the uptrend, the 2-period Force Index dipped below zero on a low-volume pullback, providing an ideal entry point to buy the dip in the direction of the larger trend.
Related Terms
Elder-Ray Index
A technical indicator that measures buying and selling pressure using Bull Power and Bear Power components, calculated relative to an exponential moving average.
On-Balance Volume (OBV)
A cumulative volume indicator that adds volume on up days and subtracts volume on down days, designed to show whether volume is flowing into or out of a security.
Volume
The number of shares or contracts traded in a security or market during a given period, indicating trading activity and liquidity.
Exponential Moving Average (EMA)
A type of moving average that gives greater weight to recent prices, making it more responsive to new information than a simple moving average.
Moving Average
A calculation that averages a security's price over a specific number of periods, smoothing price data to identify trends.
Relative Strength Index (RSI)
A momentum indicator measuring the speed and magnitude of price changes on a 0-100 scale, used to identify overbought or oversold conditions.
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