It is very important to be able to estimate the Bears Power balance since changes in this balance initially signalize about possible trend reversal. This task can be solved using the Bears Power oscillator developed by Alexander Elder and and described in his book titled Trading for a Living. Elder based on the following premises when deducing this oscillator:.
This indicator is better to use together with a trand indicator most frequently Moving Average :. The first stage of this indicator calculation is calculation of the exponential moving average as a rule, it is recommended to use the period EMA. Bears Power Everyday trading represents a battle of buyers "Bulls" pushing prices up and sellers "Bears" pushing prices down.
Elder based on the following premises when deducing this oscillator: moving average is a price agreement between sellers and buyers for a certain period of time, the lowest price displays the maximum sellers' power within the day. Application This indicator is better to use together with a trand indicator most frequently Moving Average : if trend indicator is up-directed and the Bears Power index is below zero, but growing, it is a signal to buy; it is desirable that, in this case, the divergence of bases were being formed in the indicator chart.
Calculation The first stage of this indicator calculation is calculation of the exponential moving average as a rule, it is recommended to use the period EMA. Copyright , MetaQuotes Ltd. Become a broker with MetaTrader 5 platform. For any trader-related query — please visit www. Registered company name. And vice versa, if the histogram is declining, dropping below zero, this indicates the predominance of bears.
Bears Power , in its turn, demonstrates the strength of bears in the market. It compares the lows with the EMA. If the Bears Power histogram is below zero and declining, this means sellers are holding the price below the EMA, and bears are now stronger than bulls. However, if the histogram starts growing and rises above zero, this means bulls are in control of the market.
In essence, Bulls Power and Bears Power are irregular oscillators. They appear in separate windows under the price chart. They look like bar histograms with the central line at zero. To determine the direction of the active trend, Elder recommends adding to the chart an EMA 13 , drawn by close prices. Bulls Power and Bears Power are included in many popular trading terminals.
However, you may always experiment and backtest your personalized settings. The original method by A. The latter demonstrates trend direction , while the remaining two indicators are used for finding entry points. The last peak of the Bulls Power histogram is above the previous one. Bears Power has formed a bullish divergence: on the price chart, the new low is lower than the previous one, while in the histogram, a new low is above the preceding one.
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. 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.
The last bottom of the Bears Power histogram is below the previous one. Bulls Power has formed a bearish divergence: on the price chart, the new high is higher than the previous one, while in the histogram, a new high is below the preceding one. 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. 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.
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.
To check the profitability of signals and improve your trading skills, practice on a demo account first. Find out more about A. Has traded in financial markets since The knowledge and experience he has acquired constitute his own approach to analyzing assets, which he is happy to share with the listeners of RoboForex webinars.
Timofey Zuev. It is high time to look around while there are not much statistics around. The pair can be traded by fundamental or tech analysis and with the help of indicators. This article explains what NFTs are and shares a Top 5 list of companies connected to non-fungible tokens.
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How much do you know and about the Bull and Bear Power indicators? This article will provide traders with a detailed explanation of how to use the Bull and Bear Power indicators in MetaTrader 4 and MetaTrader 5, with a step-by-step tutorial. It will also explain how to use the indicators when trading in the financial markets.
Many oscillators attempt to measure how much buying or selling power lies behind price moves in a financial market. Many do this by means of a single indicator that gauges momentum, both bullish and bearish. There is another indicator though, known as the Elder-Ray Index, that attempts to gauge bullish and bearish forces in the market by using two separate measures, one for each type of directional pressure.
Alas, this is where the Bull and Bear Power indicators come into play. Elder named the indicator after himself and X-rays, seeing a commonality between the revealing abilities of an X-ray scan, and his indicator's ability to see below the surface of the market. Both do this by making a comparison to a third measure.
This is a guide helping us see where the consensus of value lies within the market. Typically, a period exponential moving average EMA is used for this base line of value. What do we mean by consensus of value? Elder argued there are three types of traders: buyers, sellers, and the undecided ones who sit on the sidelines. A trade in the market is a deal between a buyer and a seller. Elder characterised this as a momentary consensus of value between buyers, sellers, and the undecided. This momentary consensus can change at any time, of course, as undecided traders convert to buyers or sellers.
Patterns of price movement describe the dynamics of the struggle between bulls and bears. A moving average shows us the average consensus of value for the window of observation over which the prices are averaged. If bears gain the upper hand, prices fall and the slope of a moving average will be downward. The Elder-Ray technique combines elements of both trend-following indicators and oscillators. The exponential moving average that it uses is a trend-following measure.
This operates as a kind of filter in the technique, allowing only trades in the direction of the trend. The Bull and Bear Power indicator elements are oscillators. Using all three together should, in theory, enable you to decide whether bulls or bears are stronger, and then position yourself with the dominant force in the market accordingly. Let's look at the numbers behind the three indicators that make up the Elder-Ray.
Take control of your trading experience, click the banner below to open your free demo account today:. The value recommended by Elder was a day EMA of closing prices. Elder argued that the high price of a bar represents the upper extent of bullish strength, and that comparing this level to the EMA provides a general yardstick of bullishness.
In other words:. Likewise, the low price of a bar represents the maximum extent of bearish strength in that period. By comparing the low to the EMA, it provides us a measure of general bearish strength in the market. More often than not, we would expect the high of a period to be higher than the day EMA.
At such times, Bull Power is positive. Sometimes, however, the high of a period may drop below the EMA, and at such times, Bull Power turns negative. In the same vein, we would more often than not expect the low of a period to be below the day EMA. At such times, Bear Power is negative. There will be occasions, however, when the low rises above the day EMA; and when this happens, Bear Power becomes positive.
Bull and Bear Power indicators are separate indicators in MetaTrader 4. You will find them both contained within the 'Oscillators' folder in the 'Navigator' directory, as shown in the screenshot below:. Source: MetaTrader 4 - editing the parameters for the bears power and bulls power indicators. You can use them individually if you choose, but to set them up for use in the way originally designed by Alexander Elder, you would need to add both of them along with a period EMA. Past performance is not necessarily an indication of future performance.
The period EMA is shown on the main price chart as a green dotted line. Below that, we have the histogram for Bears Power. Notice how it spends a large portion of its time below the zero line.. So how do we use this to trade? The trading rules for the Elder-Ray system are fairly simple.
The slope of the EMA suggests the direction of the trend, and you are only permitted to trade in the same direction as the trend. Bulls Power and Bears Power help you to identify entry and exits points. There are two mandatory conditions to allow a buy trade. This gradient is useful for pine coders who are creating color changing, dynamic, or gradient indicators. In addition to plotting the EMAs it color coordinates trend bias and has cross confirmation signals.
Philosophy and how to read: I use this indicator when trading strictly on the daily timeframe. I have not tested it on other timeframes. In my trade system I start with both the monthly Vadim Gimelfarb's article in this issue , "Bull And Bear Balance Indicator," describes a method of deducing market sentiment from close-to-close price movement. His system uses the various possible relationships between the previous close and current open, high, low, and close.
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Bulls Power and Bears Power help you to identify entry and exits points. There are two mandatory conditions to allow a buy trade. These are:. Bullish divergence in this case being when prices are setting new lows, but Bears Power fails to make new lows. Furthermore, the exit signal is given when prices reach a new high, but Bulls Power fails to reach a new peak. This is a sign that the influence of bulls is starting to wane in the market.
The rules for shorting the market are similar to the rules for buying:. Bearish divergence here means that prices are rallying to a fresh high, but Bulls Power are only attaining a lower peak. This weakening in bullish sentiment suggests that prices are continuing to rise through inertia only, and this is an attractive time to enter a short position for professional traders. While the combination of Bulls Power, Bears Power, and an EMA as part of the Elder-Ray method reveals useful information about the market, you can usually benefit from throwing another indicator or two into the mix.
A shrewd choice of indicators will allow you to gain a deeper understanding of what is happening in the market, by considering wider aspects of data. Naturally, the wider the choice of indicators you have at your disposal, the more flexibility you will have in putting combinations together. When you download MTSE, you will be able to pick from a larger selection of indicators compared with the standard set offered in MetaTrader 4 and MetaTrader 5. Alexander Elder himself stated that markets were too complicated to be analysed with a single indicator, noting that different indicators may yield contradictory trading signals when looking at the same market.
This is why he included the idea of filtering first with a trend-following tool, and then using oscillators to pick favourable entry points. We used an EMA as our trend-following tool above, but there are many others you could consider as alternatives. As well as using multiple indicators, you may find it useful to look at more than one time frame.
Try looking one time frame higher first, in order to get a feel for the bigger picture. For example, if you are aiming to trade using an hourly chart, make sure to first take a look at a four-hour chart, and then analyse the trend there. As with any technique, the more you practise, the more adept you will become. Before you start trading with real money, therefore, it's sensible to first try out your trading ideas within a risk-free trading environment.
An easy way to do this is to open a demo trading account. As we have discussed, Bulls Power and Bears Power are useful ways to look at the price and see the strength behind the market. Bulls Power measures the capability of buyers in the market, to lift prices above an average consensus of value. Bears Power measures the capability of sellers, to drag prices below an average consensus of value. Using them in tandem with a measure of trend allows you to identify favourable entry points.
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Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks. Contact us. Start Trading. Personal Finance New Admirals Wallet. About Us. Rebranding Why Us? Login Register. Top search terms: Create an account, Mobile application, Invest account, Web trader platform.
Brandie E Blackler. Brandie has worked professionally as a financial writer and digital marketing consultant for 12 years, while she also is an active retail swing trader and investor for the past 7 years. Brandie specializes in digital currencies and CFD trading at Admirals. Meet Brandie E Blackler on. May 20, 11 Min read. In this article, we will provide traders with an explanation of what the Keltner Channel indicator is, Keltner Channel MT4 download instructions, how to trade using a Keltner Channel strategy and much more!
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April 28, 12 Min read. I have evenly divided every color between green and red. This gradient is useful for pine coders who are creating color changing, dynamic, or gradient indicators. In addition to plotting the EMAs it color coordinates trend bias and has cross confirmation signals. Philosophy and how to read: I use this indicator when trading strictly on the daily timeframe. I have not tested it on other timeframes.
In my trade system I start with both the monthly Vadim Gimelfarb's article in this issue , "Bull And Bear Balance Indicator," describes a method of deducing market sentiment from close-to-close price movement. His system uses the various possible relationships between the previous close and current open, high, low, and close. Get started. Indicators, Strategies and Libraries All Types. All Types. Open Sources Only.