The volume also indicates the level of momentum in the market, as propelled by the power of either bulls or bears. Force index is one of the best indicators for combining both price and volume into a single readable figure. When force index hits a new high, a given uptrend is likely to continue. When force index hits a new low, the bears have greater strength, and the downtrend will usually sustain itself.
A flattening force index is also an important situational circumstance for traders. A flattening force index means that the observed change in prices is not supported by either rising or declining volume and that the trend is about to reverse. On the opposite side of the matter, a flattening force index could indicate a trend reversal, if a high volume corresponds with only a small move in prices.
So, this is the basic manner in which the force index can be used alone, or in conjunction with a moving average, to identify whether bulls or bears have control of the market. When volume is considered, an accurate sense of the market’s momentum may also be quickly garnered.