This indicator was invented by Dr. Alexander Elder. The indicator measures Bulls Power in each price rise and Bears Power in each price falls. Many aspects are taken into consideration: market direction, actual trend and its falls and rises and transactions turnovers.
Unmodified Force Index gives worse effects than the same indicator with moving averages. Shorter averages are used to identify sellers and buyers force in a shorter period of time, while longer averages show the same relation but in longer period of time.
Dr. Elder recommends the use of average from 2 periods for short term indications and from 13 periods for long term indications respectively.
If the force Index is above zero line indicator’s author says that bulls control the market. If the chart is below zero line, bears control the market. If the chart is near the zero line it means that there is lack of strong trend and neither bulls nor bears control the market.