Beginner Forex book

Beginner Forex book will guide you through the world of trading.

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

FBS Mobile Personal Area

FREE - In Google Play

View

Bulls Power and Bears Power

Information is not investment advice

The Bull Power and Bear Power are the oscillators developed by Dr Alexander Elder. They measure the power of buyers (bulls) and sellers (bears) to push the price in their favor, i.e. above or below a baseline. The two indicators combined are known as Elder-Ray Index. The function of a baseline is often performed by a 13-period Exponential Moving Average (EMA) of closing prices.  

The logic is simple: the market situation is constantly changing as bears turn into bulls and vice versa. The indicators help to track this conversion and trade on it. 

How to implement

The Bull Power and the Bear Power belong to the default set of MetaTrader. You can add them to the chart by clicking “Insert” – “Indicators” – “Oscillators” and then choosing “Bull Power”/“Bear Power”.

The Bull Power and the Bear Power metatrader

You can use the indicators individually but there’s much more sense to use them together as was planned by Elder. In addition to both indicators, plot the 13 EMA itself on the chart as well. This way you will combine the oscillators with a trend-following tool and increase the quality of the entry signals. The exponential moving average acts as a filter: it shows a trend, so that a trader could pick only those signals which are in the direction of this trend.

How to interpret indicators of Bulls Power and Bears Power

All 3 indicators form a kind of basis for a trading strategy. 

A setup for a buy trade occurs when the following conditions are met:

  • EMA is increasing.
  • Bears Power is negative but increases.

There are also other optional cut desirable conditions:

  • The last peak of the Bulls Power oscillator is higher than the previous one.
  • There’s a bullish divergence between the Bears Power and the price (the price is setting lower lows, but the Bears Power fails to do so).

It is better not to go long if the Bears Power is positive.

Bears Power

A setup for a sell occurs when the following conditions are met:

  • EMA is decreasing.
  • Bulls Power is positive but decreases.

There are also other optional cut desirable conditions:

  • The last low of the Bears Power oscillator is lower than the previous one.
  • There’s a bearish divergence between the Bulls Power and the price (the price is setting higher highs, but the Bulls Power only manages to form only lower highs).

It is better not to go short if the Bulls Power is negative.

the Bulls Power is negative

All in all, the Bulls/Bears Power indicator allows seeing the forces that are driving the market and suggest a simple but efficient basis for a trading strategy

Popular

Coronavirus vs markets: status update

Coronavirus got out of China to terrorize the rest of the world. How to trade that?

Stock market is bleeding: what do you need to know

The so-called “stock market bloodbath” has continued on Friday with major indices falling down to the lows of the last October. What's going on?

CAD: is Canadian GDP puzzled?

Canadian monthly GDP will be out at 15:30 MT time on Friday.

Choose your payment system

Learn more