Negative values indicate the bears are winning, meaning a downward trend. Traders use this info to decide when to buy or sell. Bulls Power and Bears Power help the trader estimate the current balance of powers of buyers and sellers in the market and provide extra trading opportunities. To increase the efficacy of your trading, use them alongside other indicators and tech analysis instruments. Thus, bull strength indicates buying prospects when its bars are rising. When analyzing bull-bear power factors, it is also worth considering that their zero value means that market forces are balanced between the interests of buyers and sellers.
These indicators were created by a famous trader and the author of the book “Elder 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. The combination of these indicators is also known as the Elder Ray. In MT4, you can also change the settings of the moving average, a price type, style (line thickness, color, dotted lines). Other parameters can be adjusted to the trading platform. For example, you can also specify the “Apply to” parameter on MT4.
Its based on a 13-period exponential moving average recommended by Dr. Alexander Elder. The bull-bear power indicator formula looks like this. It is important to remember that the bear power trend indicator covers low and high asset prices.
Overview of the Bull Bear Power Indicator
- On the LiteFinance platform, you can also specify the type of moving average.
- Alexander Elder, M.D., is a professional trader whose books include The New Trading for a Living.
- This situation leads to the fact that the price hardly changes.
- While you can use it for free, remember that republishing the code is subject to our House Rules.
- When using the bull power indicator, you should buy when the histogram moves above zero and the high price is higher than the EMA.
- High-quality market research requires analyzing a lot of information, which is why the best Forex robots will be useful.
Place a Stop Loss behind the local high on the price chart and take your profit when a strong support area is reached or some evidence of a reversal upwards appears. Place a Stop Loss behind the local low on the price chart and take your profit when a strong resistance area is reached or some evidence of a reversal downwards appears. After the signal forms, place a pending buy order (or enter by the market) a bit higher than the high of the last two candlesticks. This website is operated by TM Trading Ltd, an entity regulated by the Seychelles Financial Services Authority (FSA) with License No.
Average Directional Index (ADX indicator)
Bulls Power demonstrates the strength of bulls in the market. It compares the highs with the Exponential Moving Average. If the Bulls Power histogram is above zero and growing, this means buyers are holding the price above the EMA, and bulls are now stronger than bears. And vice versa, if the histogram is declining, dropping below zero, this indicates the predominance of bears. Accumulation/Distribution Indicator (abbreviated as A/D) is one of many technical indicators designed to analyze price movements and trading volumes simultaneously.
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- Bull power trend is declining from a bearish divergence.
- The bull-bear indicator helps accurately determine the main trends prevailing in the market, which is the basis for a successful, properly diversified investment portfolio.
- Get the latest Ford Motor Company stock forecast for 2024.
- This data is insufficient to build a trading strategy.
- The difference lies in the calculation formula and in what the indicators display.
If the Elder-Ray Index fluctuates around the zero line, it points to a certain equilibrium in the market, which means a balance between supply and demand. This situation leads to the fact that the price hardly changes. If the index in question rises above or below the zero line, this suggests that one of the market forces, bulls or bears, dominates. It should immediately be said that this technical analysis tool consists of two parts. One is called bears power and calculates the strength of the bears, and the other is called the bulls power indicator and calculates the strength of the bulls. It is advisable to use them combined together for double confirmation of trading signals.
You acknowledge that you are seeking information from this website under the principle of reverse solicitation, in accordance with the applicable laws of your home jurisdiction. This article is offered for general information and does not constitute investment advice. Please be informed that currently, TradingMoon is only offering CFDs. The information on this website does not constitute investment advice, a recommendation, or a solicitation to engage in any investment activity. There is a difference of just over 20 pips between the second and third price highs. This difference would have led to a drawdown if you had opened a short position after the second high.
Bull Bear Power
Developed in 1989, the indicator can be applied to any security chart. Elder-Ray helps traders determine the strength of competing groups of bulls and bears by looking for data that may not be immediately analyzed. For successful trading, investors need to know who is in charge of the market. This information helps correctly identify the beginning of a trend reversal and make the most profitable deals. The bull-bear indicator helps accurately determine the main trends prevailing in the market, which is the basis for a successful, properly diversified investment portfolio. It is often advisable to apply these indicators together with a trend indicator such as moving averages in order to seek a confirmation of the trend’s direction.
This is a sign of a growing downtrend, so the next candle could make a sell off. The bulls power indicator calculation is performed by subtracting the high-price of the current candle from the EMA value. Thus, this formula demonstrates the strength of the bulls in relation to the price averaged over a given time interval by the EMA method. The formula uses high-price, as the bulls push the quote up, based on which, they determine the maximum prices.
Commodity Channel Index (CCI) Indicator
On lower time frames, indicators will show frequent trend changes and give a lot of false signals. On the D1 and higher time frames, it takes a long time for a confirming signal to emerge. This is a working strategy, but it requires patience, as early market entry may bring losses. This indicator reveals the strength of bulls and bears.
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Since these data are interconnected, A/D helps understand how volumes affect prices. To work with this tool effectively, you first need to understand what accumulation and distribution in Forex are and how to interpret them correctly. In true TradingView spirit, the creator of this script has made it open-source, so that traders can review and verify its functionality. While you can use it for free, remember that republishing the code is subject to our House Rules. Bull and Bear power is not as well-known as some other indicators. However, it can provide a clear and useful visualization of who is ‘in charge’ of the market at that time.
On most trading platforms, bull and bear power indicators are the main parameters for analyzing market trends. Their usefulness for successful trading is hard to overestimate. Both bulls and bears power indicators are interrelated. When the strength of the buyers increases, the strength of the sellers decreases accordingly and vice versa. Most often, both indicators are placed on the chart at the same time, as they confirm each other’s signals and the signals generated by trend indicators. Bulls Power and Bears Power are oscillator-type indicators that show the strength of buyers and sellers on different time frames.
Find out how the EUR/USD, GBP/USD, USD/JPY, and other currency pairs could change in 2024. Get the latest Ford Motor Company stock forecast for 2024. After the signal appears, place a pending sell order (or enter by the market) a bit lower than the low of the last two candlesticks. FXOpen has announced that it will no longer support STP trading accounts starting from December 20, 2024.
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If the buyers’ power grows, the sellers’ power should fall accordingly. In this case, Bulls Power goes to its maximums, and Bears Power, on the contrary, tends to the zero line. Bears Power will go lower in the negative zone, Bulls Power will move to the zero line.
To sum up, traders can use the Bull Bear Power Indicator to identify and interpret bullish and bearish signals. This indicator uses two exponential moving averages to see if bulls or bears are in charge. Positive Bull bear power values mean bulls are stronger, which suggests an upward trend.