EFI indicator: Elder Force Index
EFI (Elder's Force Index) indicator is used to determine the force trend and developed by the famous trader Alexander Elder. The EFI indicator takes into account the opening and closing prices, as well as the tick volume for a certain period of time.
The Elder's Force Index indicator displays the results as a histogram, which is plotted along the zero line.
When the EFI indicator histogram is above the zero level and/or reaches a new height, it indicates the superiority of the bulls and the continuation of upward trend. You can look for points to open positions to buy.
If the histogram of the Elder's Force Index indicator falls to a new depth and appears below the zero level, it indicates the strength of the "bears" and the preservation of downtrend. You should look for a sell entry.
The experts of fortrader.org point out that it is important to make sure that price changes are confirmed by a similar change in volume. If this does not happen, it is a signal of a trend reversal. (At the beginning of a trend, prices often fall or rise on high volume. Closer to the end of a trend, prices slow down and volume decreases.)
If the histogram EFI indicator is near the zero line, then there is no pronounced trend, and it is not necessary to open a position.
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