Both bulls and bears are trying to push the price in their favor, either up for selling or down for buying. Apart from the bulls bears Power indicator combination, the Elder-Ray indicator also uses the Exponential Moving Average (EMA) to calculate the strength of two sides of the trade. Usually, a 13-day EMA is taken as a baseline, and depending on how the bears and bulls’ powers act relative to it, traders may buy or sell their assets.

Remember that price is a consensus among investors of value for any given security at a particular point in time. The moving average is simply a consensus of value that is extended for a certain window of time. The 13-day EMA referenced earlier is the average consensus of value over the last 13 days. For oscillators that can generate buy and sell signals, consider adding Bulls Power and Bears Power indicators to your Forex charts. The high of the consensus of value occurs when bulls cannot lift prices any higher, thereby reaching their maximum power. The low represents the lowest value to which the bears are capable of pushing the price, thereby reaching their maximum power.

How to interpret Bulls and Bears power indicator signals in trading?

Traders can use this information to identify potential buying and selling opportunities, as well as to confirm trends and momentum. Divergences between bull or bear power and prices indicate the best trading opportunities using the Elder-ray index. Equally important is the slope of the exponential moving average, as direction indicates the general trend. As with any technical indicator, Elder-ray is best used with other forms of fundamental or technical analysis and not as a standalone tool.

• This can help provide a more complete picture of market trends and direction.
• These individual indexes are grouped according to representative sectors of market participants.
• While one might hypothetically use any exponential moving average, most commonly, one uses the 13-day EMA, as suggested by Elder when he came up with these indicators.
• These colors are irrelevant to the location of the bar meaning it doesn’t matter if the bar is liked or dark color above zero or below zero.

Are you looking for a reliable indicator to help you make informed trading decisions? This versatile tool can provide valuable insights into market trends and momentum, allowing traders to capitalize on opportunities and minimize risks. Accordingly, when there are long columns in both negative indicators in the negative zone, this indicates a strong downward trend, since the current candle is completely below the average price. Another way to use the Bull Bear Power Indicator Formula is to look for crossovers. A bullish crossover occurs when the indicator crosses above the zero line, indicating a shift from bearish to bullish sentiment. A bearish crossover occurs when the indicator crosses below the zero line, indicating a shift from bullish to bearish sentiment.

What does bulls and bears power mean?

The Bulls Bears power indicator can be used as an oscillator where buy/sell signals are triggered when the indicator crosses above and below the 0-line. The following chart “Bull-Bear Power with Open-Close 20 EMA Trading System” illustrates the buy/sell signal generated by the Bulls Bears power moving above and below the 0-line. These indicators were created by a famous trader and the author of the book “Elder Bull bear power Triple Screen” Alexander Elder. They help estimate the current power balance of buyers and sellers and catch the moment when bears/bulls are getting weaker. When the light blue and the purple moving averages cross each other above closing volume or below closing volume is when you have a strong move in the opposite direction. These two moving averages combined are always pushing volume away from it.

• Divergences between bull power indicator and prices indicate the best trading opportunities.
• On the NFLX chart below, you can see how strong Bull Power was during the runup from late January to late February which also pulled the Bear Power above the zero line.
• Using the strength of bulls and bears power indicator, it is possible to identify in which direction the market is moving.

This does a really good job of telling you exactly what’s happening with volume as it’s moving along. Breaking a previous high or previous low also means that you can either trade to the long side or to the short side. This is just an added confirmation to layer into your background and your volume bar colors.

How to use Bull Bear Power Indicator Formula for trading

We try to maintain hiqhest possible level of service – most formulas, oscillators, indicators and systems are submitted by anonymous users. Be sure to verify that any information you see on these pages is correct, and is applicable to your particular trade. The https://investmentsanalysis.info/ Indicator Formula is a powerful tool for traders looking to capitalize on market trends and momentum. On these premises, Elder developed Bulls Power as the difference between the highest price and 13-period exponential moving average (HIGH – EMA).

If you wanted to write this for the previous bar instead of the current bar, you would need to add back the offset parameter. If you are looking to trade forex online, you will need an account with a forex broker. If you are looking for some inspiration, please feel free to browse my best forex brokers. IC Markets are my top choice as I find they have tight spreads, low commission fees, quick execution speeds and excellent customer support. Any information contained in this site’s articles is based on the authors’ personal opinion. These articles shall not be treated as a trading advice or call to action.