Elder Force Index With ATR Channels

Adding Average True Range (ATR) channels to Force Index had been suggested by Kerry Lovvorn. Adding these channels turns Force Index into an excellent tool for identifying intermediate tops and bottoms. Force Index with ATR channels does not catch all turns, but the ones it identifies deserve very serious attention.

Note: the word “true” in Average True Range refers to dealing with price gaps. Since there are no gaps in Force Index, here ATR is the same as the Average Range.

Whenever the Force Index rises above or falls below its 3-ATR channel, it signals that the ticker has reached an area of an unsustainable extreme. That’s where rallies and declines become exhausted and prices tend to reverse. This is one of very few tools that are equally efficient in calling both top and bottom areas. Elder-disk places a red arrow above the plot when the EMA of Force Index rises above the 3-ATR channel. It places a red arrow underneath the plot when that EMA declines below the 3-ATR channel.

In our experience, these signals work especially well on the weekly charts. Of course, users are welcome to experiment with them in any timeframe.

The parameters are

• Force Index Period (13) – the length for the MA of raw Force Index
• Force Index MA mode (Exponential) – the Moving Average mode of Force Index
• Force Index Volume type (ticks) - the type of volume on which to apply the Force Index

• ATR period (14) - the length of raw ATR
• ATR amplificator (100) - a modifier to amplify the ATR

• Mode of the MA of Bands (Exponential) – the MA mode for all the bands.
• Length of the MA of Bands (21) -  the length for the MA of the bands
• 1st bands factor (1) - the factor for the 1st bands (+ and -)
• 2nd bands factor (1.5) - the factor for the 2nd bands (+ and -)
• 3rd bands factor (2) - the factor for the 3rd bands (+ and -)

• Wingdings code of spike sign above (242) – the Wingdings code of the symbol (down arrow). You can see the list of possible symbols in the screenshot section.
• Color of spike sign above (Red) - the color of the symbol above the bands
• Wingdings code of spike sign below (241) – the Wingdings code of the symbol (up arrow). You can see the list of possible symbols in the screenshot section.
• Color of spike sign below (LimeGreen) - the color of the symbol below the bands

Format Tips: Force index channel has 7 plots – the Force Index, the smoothed Force Index and upper and lower bands at 1, 2 and 3 ATR.

The Force Index is drawn in blue with a thick line. The Averaged Force is a solid red line. The upper and lower bands at 1 ATR are drawn in dotted lines. The upper and lower bands at 2 ATR use dashed lines. The upper and lower bands at 3 ATR are solid gray lines.