Using Force Index Volatility Bands to Spot Breakouts and Reversals

Summary

The document introduces the Force Index, an indicator attributed to Alexander Elder, and gives its basic calculation: price change multiplied by current volume, with a 13-period exponential moving average as a smoothed version. It describes a variant that adds volume or volatility bands to the indicator. The proposed use extends beyond watching for crosses of the zero line: the bands are said to help identify impulsive moves, breakouts, and possible reversal points in range-bound markets.

The document offers only a brief description and names two example situations, without showing the charts, defining how the bands are calculated, or specifying entry and exit rules. It provides no tests or performance evidence, so the claims should be treated as ideas to investigate rather than established results. Traders would need to define the band construction and signal conditions, then evaluate them across instruments and market regimes, accounting for volume quality and false signals.

Key ideas

• The basic Force Index combines price change with current volume.
• A 13-period exponential moving average is presented as a smoothed Force Index.
• Adding volume or volatility bands is proposed as a way to highlight impulsive moves and breakouts.
• The banded indicator is also suggested for locating possible reversals in range-bound markets.
• The document gives no band formula, trading rules, or empirical validation.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.