Oscilattor: Strength Index

The strength index (FI) is used to measure the strength of bears and bulls in a market that tends to trend. This indicator is based on price, direction and volumes traded and can be smoothed by a moving average of short term (2-10 periods) or long term (13 periods). 
How to interpret:
If the current closing price is greater than the previous one, the index will be positive. When the indicator goes up, it shows the strength of the bulls and vice versa: if the closing price is lower than the previous one, the indicator will be negative, showing the strength of the bears. 
If the trend is strong, the strength index will change dramatically. It is likely that it will signal the continuation of the trend;concomitantly, if prices change by inertia, the IF will only change slightly.
If the current price goes up but the indicator does not, it means that the bullish trend is weakening.
Signals of purchase:
– The force index is registering new highs in a bullish trend (trend confirmation).
 The forces become negative (below zero) in the period of upward trend (buy in falls).
– The strength index goes above zero in a downward trend.
– The force index crosses the MM to the top side.
– Divergence (price makes lower lows while FI makes higher highs).
Signs of sale:
– The force index is registering new minimums in a downward trend (trend confirmation).
– The forces become positive (go above zero) in the period of a downward trend (sale in pullbacks).
– The strength index goes below zero in a bullish trend.
– The force index crosses the MM to the underside.
– Divergence (the price makes higher highs while the FI makes lower lows).

XAUUSDH1 force index.png


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