The Elder's Force Index uses volume and price change from previous close to determine the momentum behind a price move in a given direction. An increasing Force Index is indicative of strong interest in the direction of the price move while a decreasing Force Index suggests that price is moving counter to the major trend. It is calculated by exponentially smoothing the product of volume and the difference in price from previous close to current close. The default period in Investor/RT is 2 as suggested by the indicator's author, Alexander Elder.
Presentation
Above is a 5 Minute Candlestick Chart of Cisco Systems (CSCO), overlaying a volume histogram for CSCO . The gray line in the lower window pane represents the Elder's Force Index, based on the preferences specified below.
