How to Trade with Force Index indicator
Force Index (FI) measures the force of bears and bulls in a trending market. This indicator is based on price, direction and trade volumes, which are the three essential elements of the price’s movement. The FI can confirm a trend, identify corrections that are worth trading and even foresee the reversals.
If the current closing price is higher than the previous one, the index will be positive. When the indicator rises, it shows bulls’ force. Vice versa, if the closing price is lower than the previous one, the indicator will be negative showing the bears’ force. As a result, it’s worth watching the moments when the FI crosses the zero line.
If a trend is strong, the force index will change sharply. More likely, it will signal the continuation of a trend. At the same time, if prices change by inertia, the FI will change only slightly. If the current price increases but the indicator is not, it means that the uptrend weakens.
What is the best strategy for Force Index Indicator( FI)
✅First, notice the spike, it signals the end of uptrend.
✅Then, after the bearish divergence between FI index and the price is formed, wait for the 13-period EMA to turn downwards.
✅When the price crosses 13-period EMA to the downside, consider a sell entry.
✅Open a short position at the next bearish candlestick after the cross.
✅Don’t forget to set the Stop Loss at the recent resistance.
✅Hold your order open until the Force index breaks above the 0 level.
✅Finally, at this moment, close the trade.