Elder Force Index (EFI)

The Elder Force Index (EFI) is a technical indicator developed by Dr. Alexander Elder that measures the force (power) behind price movements by combining price change with volume. It quantifies how strongly bulls or bears are driving the market.

The raw Force Index is calculated for each bar, then smoothed with an EMA:

Raw Force = (Close - Close_prev) x Volume
EFI = EMA(Raw Force, period)

The logic is intuitive:

• A large price move on high volume produces a large force value
• A small price move on low volume produces a small force value
• Direction is determined by whether the close is higher or lower than the previous close

• Combines price and volume — measures the actual power behind moves
• Oscillates around zero — positive = bullish force, negative = bearish force
• Smoothed with EMA — default period 13 reduces noise while preserving signals
• Unbounded — values depend on price and volume magnitude
• Developed by Alexander Elder — from the "Trading for a Living" methodology

Zero line crossover

• EFI crosses above 0 — bulls are in control, buying opportunity
• EFI crosses below 0 — bears are in control, selling opportunity

Trend pullback entries

• In an uptrend: EFI dips below 0 then recovers — pullback buy signal
• In a downtrend: EFI rises above 0 then falls back — pullback sell signal

Divergence

• Bullish divergence: Price makes a lower low, EFI makes a higher low — weakening selling pressure
• Bearish divergence: Price makes a higher high, EFI makes a lower high — weakening buying pressure

Volume spikes

• Extreme EFI values (very positive or very negative) indicate climactic moves that may precede reversals

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 13 | EMA smoothing period for the raw Force Index |

| Condition | Meaning | |-----------|---------| | EFI(13) cross_over 0 | Force turned bullish | | EFI(13) cross_under 0 | Force turned bearish | | EFI(13) > 0 | Bullish force is dominant | | EFI(13) < 0 | Bearish force is dominant | | EFI(2) cross_over 0 | Short-term force turned bullish (for pullback entries) |

• Use EFI(2) for short-term pullback entries within a larger trend
• Use EFI(13) for identifying the overall force direction
• EFI works best when combined with a trend indicator (EMA 20/50)
• In Elder's methodology, use the "Triple Screen" system: weekly trend + daily EFI for entries
• High-volume, large-move candles create EFI spikes — potential exhaustion signals
• Works for all markets: crypto, stocks, and forex