The Elder Force Index (EFI) is a momentum-based forex indicator that helps traders measure trend strength and potential reversals using price, volume, and direction. In this guide, we’ll explore how EFI works, its advantages, and the best trading strategies to use it effectively.
The Elder Force Index (EFI) is a technical momentum indicator developed by Dr. Alexander Elder to measure the strength of a price movement using volume, price changes, and direction. EFI helps traders identify trend strength, breakout confirmation, and potential reversals.
EFI is calculated using the following formula:
EFI = (Close Price – Previous Close) × Volume
To smooth out fluctuations, a moving average (typically 13-period EMA) is applied to the raw EFI values.
EFI helps confirm the strength of an ongoing trend:
Recommended Settings:
Divergence between price and EFI can indicate potential trend reversals:
EFI can confirm breakouts when price moves beyond a key level:
Pairing EFI with a moving average (e.g., 50 EMA) improves trade confirmation:
✅ Pros:
❌ Cons:
The Elder Force Index (EFI) is a powerful volume-based indicator that helps traders measure trend strength, identify reversals, and confirm breakouts. When combined with moving averages or divergence analysis, EFI enhances trade accuracy and decision-making.
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