Force Index

The Force Index was developed by Dr. Alexander Elder and measures the power behind a price move using price and volume. The indicator is primarily used used to detect divergences but can also be used for trend confirmation.

The Force Index developed by Elder

Indicator Description

The Force Index indicator combines direction, extent and volume producing an oscillator that fluctuates above and below a Zero Line:

1. Direction: If prices move up during a period, it may indicate that buyers are stronger than sellers. Conversely, if prices are moving to the downside sellers are most likely in stronger position than buyers.

2. Extent: Significant price moves shows high levels of buying or selling pressure.

3. Volume: High volume shows a strong commitment underlying the price movement.

Our version of the Force Index indicator comes with the option of calculating with Relative Volume. For additional information on the Relative Volume indicator, please refer to this blog post. Next, one may normalize the oscillator values by activating that option in the indicator dialogue box. A blogpost on why normalizing oscillator values is useful was discussed in our Indicator Spotlight on the Z-Score indicator

Other Library indicators

For ideas on how to use the indicator you may consider reviewing our posts on the TDI indicator or the Squeeze momentum setup. Furthermore, the Force Index indicator may be used in combination with Trend FiltersTrend Analysis and Momentum Oscillators such as the Awesome Oscillator, RSISlow RSI or the Daily Regression Channel, the Donchian Channel or the Heikin Ashi candles for determining market trends. Support / resistance indicators are located the Session Tools category and we have a post on Fibonacci retracement levels.

For instruments that lack reliable volume information (FX/Crypto currencies), you may consider using the Relative Ranges indicator, which was discussed this post.

The indicator is available for NinjaTrader 8.