Finance:Force index

The force index (FI) is an indicator used in technical analysis to illustrate how strong the actual buying or selling pressure is. High positive values mean there is a strong rising trend, and low values signify a strong downward trend.

The FI is calculated by multiplying the difference between the last and previous closing prices by the volume of the commodity, yielding a momentum scaled by the volume. The strength of the force is determined by a larger price change or by a larger volume.

The FI was created by Alexander Elder.

Calculation and smoothing

The force index is commonly calculated by subtracting the previous closing price from the current closing price and multiplying the result by the current period's volume:

$\text{Force Index}=(\text{Current close}-\text{Previous close})\times \text{Volume}$

For periods longer than one day, the force index is commonly calculated as an exponential moving average of the one-period force index. A 13-period force index, for example, is calculated as a 13-period exponential moving average of the one-period values.