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1995issue C041-7

Constructing a dual-horizon force index

A force series multiplies session volume by the signed close-to-close change. Exponential averages then split that series into a two-day timing overlay used only after a price trend filter and a 13-day control series read against its center line.

  • The force series combines close-to-close direction, move size, and session volume, so a large move on heavy volume produces a larger reading than the same move on light volume.
  • The two-day exponential average of the force series is a timing overlay applied only after a 13-day exponential average of price has classified an uptrend or a downtrend.
  • The 13-day exponential average of the force series is read against its center line for bull control, bear control, or a trendless stall.
  • Divergence is a mismatch in which price prints a new high or low while a two-day or 13-day exponential average of the force series prints a weaker extreme.
Entries in this reading3 entries
Volume-price analysis12 readingsMoving average18 readingsCurrent trackPrice-indicator divergence19 readings

How the force series is built

The force series is a constructed force index equal to session volume multiplied by the signed close-to-close change. A higher close is positive and a lower close is negative.

Direction, the size of the close-to-close change, and session volume all scale the reading. A large move on heavy volume produces a larger force value than the same move on light volume.

Smoothing and scaling

The unsmoothed series is described as jagged, so exponential moving averages are applied. A two-day span is used for short-horizon timing, and a 13-day span is used for intermediate bull-bear control.

Dividing the force series by the underlying price is presented as a scaling step that keeps those exponential averages more chartable.

Nikkei Dow force index and dual EMAs

Session force on the Nikkei is volume times the signed close-to-close change; the two-day EMA is the timing overlay and the 13-day EMA is the center-line control series. Values are taken from the article's spreadsheet, not from a redrawn chart.
Session force on the Nikkei is volume times the signed close-to-close change; the two-day EMA is the timing overlay and the 13-day EMA is the center-line control series. Values are taken from the article's spreadsheet, not from a redrawn chart.Nikkei Dow Jones index · daily · 1994-10-29T00:00:00.000Z to 1994-11-22T00:00:00.000Z

Force is blank on 10/29 because there is no prior close. Two-day EMA is first printed on 10/30; 13-day EMA first appears on 11/16 after the lookback fills.

A two-day overlay after a trend filter

The two-day exponential average is treated as a timing overlay, not a standalone system. It is applied only after a trend-following filter, illustrated as a 13-day exponential average of price, has classified an uptrend or a downtrend.

In that filtered setup, a turn of the two-day force average below zero during an uptrend is the long-location condition. A turn of the two-day force average above zero during a downtrend is the short-location condition.

Illustrated entries use stop orders. A buy stop is placed above the high of the bar that flipped the two-day force average negative in an uptrend. A sell stop is placed below the low of the bar that flipped the two-day force average positive in a downtrend.

Intermediate control against the center line

Intermediate control is read from the 13-day exponential average of the force series relative to its center line. A reading above the line is bull control, and a reading below the line is bear control. A stall near the line is a trendless warning against trend-following methods.

Price and force extremes

Price-indicator divergence is defined when price makes a new extreme while a two-day or 13-day exponential average of the force series fails to confirm that extreme.

A new peak or new low in the 13-day exponential average of the force series is treated as a continuation hypothesis. A lower force peak against a new price high is treated as a loss-of-power warning.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
6 of 16 in the Price-indicator divergence track
19961-6 pp.Next on Price-indicator divergenceBuilding a range-normalized divergence index from relative strength indexA candidate peak is accepted only after a chosen peak-strength count of lower highs appears on each side, so a small count compares nearby turns and a large count compares more substantial turns.
All readings on this track · 16 readings
  1. 1989Volume confirmation windows and exponential average construction
  2. 1990Constructing stochastic %K and %D from range position
  3. 1990Build a weekly leading sector composite from scaled transports and financials
  4. 1990Constructing stochastic K and D lines and divergence cues
  5. 1993Relative strength index events depend on the chosen input combination
  6. 1995Constructing a dual-horizon force index
  7. 1996Building a range-normalized divergence index from relative strength index
  8. 1998Treat RSI as a testable filter rather than a trigger
  9. 1999Primary-cycle windows, then stochastic confirmation
  10. 1999Stochastic rules versus buy and hold
  11. 2001Constructing confirmation filters for RSI overbought and oversold extremes
  12. 2003Constructing divergence-equivalent relative strength index and stochastic oscillators
  13. 2003Reverse-engineered RSI as a next-close projection
  14. 2003Scoring open versus resolved relative strength divergences
  15. 2003Bull-and-bear-balance from OHLC bar patterns
  16. 2003Constructing bull and bear balance from session paths
By fieldIndicators and filters56 readingsBy year199510 readings
All 19 readings tagged Price-indicator divergence
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