Montdouan-De-Sprimont

Colored Columns for Elder's Force Index EMA

The Elder's Force Index is an oscillator that takes into account the change of the price combined with the volume:

EFI = (close of the current day - close of the previous day) * volume of the current day

If measure the force of the price change.

If you calculate the exponential moving average of the last two days to smooth the signal EMA ( EFI ,2), you have a nice buy/sell indicator in the context of the "Elder Triple Screen Method":

- If you are in a long term uptrend (for example ema (13) going up), you have a buy signal if EFI (2)<0, because then you have a short term downtrend in a long term uptrend. Put a "stop buy" a bit higher in case the long term uptrend continues.
- If you are in a long term downtrend (for example ema (13) going down), you have a sell signal if EFI (2)>0, because then you have a short term uptrend in a long term downtrend. Put a "stop sell" a bit lower in case the long term downtrend continues.

This graph shows you colored columns for the EMA ( EFI ,2), which is more visible than the one-color indicator provided by default by TV.
You can also display the EFI itself on top of the columns. (optional, I personaly do not use it)

PS: ema (13) is to make the explanation simple. Personaly, I use MACD histogram on a weekly view to define if I am on a long term uptrend or downtrend.
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