Force index is an oscillator indicator.

Being an oscillator indicator, Force index indicator was created by Alexander Elder to help traders measure the power of bull market whenever the price increases and the power of bear market whenever the price decreases.

According to Alexander Elder,Force index indicator is based on three key components,that is;

-Direction of price change

-The extent of price change

-And the trading volume

 

Furthermore, the values of Force index indicator is best approximated with the help of moving average as follows;

 

-By subtracting yesterday close price by today's close price and then multiplying the result by today's volume.This is indicated as below;

 

FORCE INDEX= V|*(CCURRENT-CPREVIOUS) where as;

 

V is volume,C is closing price ,current is today's close price and previous is yesterday's close price.

If closing price are higher today than yesterday then the force is positive while if closing price are lower today than yesterday then the force is negative.

 

1. Force Index Oversold market

 

 Just like in other indicators,Force index indicator has an oscillator at point 0.0 in which when the force index crosses above 0.0 then the index becomes positive while when it crosses below 0.0 then the index becomes negative.

When force index is below 0.0 and the period of indicator is inclining,then that is an indicator that the market will move upwards thus the cryptocurrency trader should place a buy order of a given amount of cryptocurrency in terms of USDT if they have a USDT balance in their account since the market of the cryptocurrency they want to purchase will start moving upwards.The cryptocurrency trader can either place a market buy order which will be executed instantly or they can place a buy limit order which will be executed when the market reaches their buy limit price.The cryptocurrency trader should place their buy order with risk management. This is indicated as from below;

 

 

From the candlesticks chart above,there are two points,point A and point B. The market represents the TRX market in terms of USDT. At point A, there are two adjoining arrows thus it is the force index indicator. On the other hand at point B, the force index has fallen below 0.00 and at the same time the period of the force index is increasing over there thus an indication of an oversold market over there. This will signals the cryptocurrency trader to buy a given amount of TRX using the USDT balance in their since the market is starting to move upward.The cryptocurrency trader can either place a buy market order which will be executed instantly or they can place a limit buy order which will be executed when the market reaches their limit buy order. When the market starts moving upward,then the account of the cryptocurrency trader will start increasing in value in terms of USDT.

 

 

2.Force Index overbought market
 

Just like in other indicators,Force index indicator has an oscillator at point 0.0 in which when the force index crosses above 0.0 then the index becomes positive while when it crosses below 0.0 then the index becomes negative.

When force index is above 0.0 and the period of indicator is decreasing,then that is an indicator that the market will move downwards thus the cryptocurrency trader should sell the amount of TRX which he had previously purchased and is currently holding to avoid their account declining in value. The cryptocurrency trader can either place a market sell order which will be executed instantly or they can place a sell limit order which will be executed when the market triggers their sell limit order price.When their sell order is being executed,their account will increase in value in terms of USDT. This is indicated as from the candlesticks chart below;

 

From the candlesticks chart above,there are two points,point A and point B. The market represents the TRX market in terms of USDT. At point A, there are two adjoining arrows thus it is the force index indicator. On the other hand at point B, the force index has risen above  0.00 and at the same time the period of the force index is decreasing over there thus an indication of an overbought market over there. This will signals the cryptocurrency trader to sell the amount of TRX which he had previously purchased and is currently holding to avoid making their cryptocurrency account to decline in value.The cryptocurrency trader can either place a market sell limit order which will be executed instantly or they can place a sell limit order which will be executed when the market price reaches their sell limit order price.

 

 

Recommendation: Cryptocurrency market is highly volatile. When you place a buy order, make sure to apply risk management to be safer incase your buy order goes against you.      

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