| 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). |
