In general, traders will want to buy when the two-day EMA of the force index is negative and sell when it is positive. These traders, however, should always keep in mind the overarching principle of trading in the direction of the 13-day EMA of prices. The 13-day EMA of the force index is a longer-term indicator, and, when it crosses above the centerline, the bulls are exerting the greater force. When it is negative, the bears have control of the market. Of particular importance are divergences between a 13-day EMA of force index and prices, which correspond with precise points, indicating crucial turning points of the market.
As indicated by closing prices, the difference between yesterday’s and today’s close gives the degree of the day-to-day victory of either the bulls or the bears. Similarly, the volume is added into the calculation to give a greater sense of the degree of bulls’ or bears’ victories.