FORCE INDEX
The Force Index is an oscillator that fluctuates above and below zero. It combines price movement and volume to assess the force behind price movements and spot potential trend changes. Use the following calculation to produce a 1-period Force Index:
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Force Index (1) = [Close (current period) - Close (prior period)] x Volume
Alexander Elder, the creator of the indicator, suggested using a 13-period Force Index:
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Force Index (13) = 13-period exponential moving average of Force Index(1)
The 13-period Force Index confirms short-term uptrends when above zero, and confirms short-term downtrends when below zero. When the Force Index Diverges with price, it indicates a trend change may be coming.
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