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. The Elder-Ray Index is a technical indicator developed by Dr. Alexander Elder that measures the amount of buying and selling pressure in a market. This indicator consists of two indicators known as „bull power” and „bear power,” which are derived from a 13-period exponential moving average (EMA). These, along with the EMA, help traders determine the trend direction and isolate spots to enter and exit trades.
Volume Weighted Average Price (VWAP)
This indicator was originally developed by Daniel Fernandez (Currency Trader magazine, 2011). It is based on the two well-known indicators by Dr. Alexander Elder – Bulls Power and Bears Power. Signals 1) Long when Bull and Total lines indicate 100 (it happens rarely)2) Short when Bear and Total lines indicate 100 (it happens rarely)3) Bull… Besides the above two ways, Alexander Elder also defined his own set of trading rules using the Bulls Bears power indicator and a 13 period EMA. Both indicators are an auxiliary tool for finding and confirming trends.
A signal to buy
It indicates a sell signal when the histogram trends below the zero level and the low-price level is lower than the exponential moving average. On the other hand, it indicates exit signals when the histogram trends above the zero level and the low price is more than the exponential moving average. Elder Ray Index is a technical indicator especially developed to identify the bull or bear power in the market. When bulls are more powerful, the prices are said to increase, and EMA slopes upwards.
- U.S. stocks slipped on Wednesday and failed to extend Tuesday’s bounce back that snapped a three-day rout for the major bourses, including the S&P 500.
- Both bulls and bears power indicators are interrelated.
- All 3 indicators form a kind of basis for a trading strategy.
- Divergences between bull or bear power and prices indicate the best trading opportunities using the Elder-ray index.
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Like other indicators, Bears Power and Bulls Power have their advantages and disadvantages. However, it is necessary to choose different EMA values for each market and asset. In addition, the accuracy of indicator signals depends on the selected time frame and market volatility. The Bears Power indicator (BE) shows the gradual decline of the sellers’ strength. We could open a long trade on the next candlestick, but the Bulls Power indicator (BU) has only two green bars formed at this point, the second of which is lower than the first one.
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. Dr. Alexander Elder cleverly named his first indicator Elder ray because of its function, which is designed to see through the market like an X-ray machine.
The EMA period is selected individually for each time frame, asset, and volatility in the strategy tester. Divergences between bear power indicator and prices indicate the best trading opportunities. If trend indicator is up-directed and the Bears Power index is below zero, but growing, it is a signal to buy. The Bull and Bear Power oscillator was developed by Alexander Elder. It determines the strength of buyers (bulls) vs. sellers (bears) as it measures the difference between the highest price and a 13-period EMA, plotted as a histogram. If you are in your 20s, 30s or even your 40s and are investing for a far-off goal, like retirement, strive to hold onto your stocks and keep investing during any market.
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This indicator is used together with a trend indicator (mostly Moving Average). If trend indicator is down-directed and the Bulls Power index is above zero, but falling, it is a signal to sell. Bull power trend is declining from a bearish divergence. As in the case of buying, the strongest crypto signals for shorting are rendered by bearish divergences between bull power trend and prices.
When the slope rises, the crowd is becoming more bullish. Clearly, the best course of action is to trade in the direction of the EMA. Bull–bear line is the index average line that indicates bull market or bear market in stock market. The next chart below illustrates the scenario where the Bears power indicator turns extremely negative and depicts a strong decline in prices as a result.
But a bear market doesn’t always indicate that a recession is coming. In recent history, a recession has followed Bull bear power a bear market about 70% of the time. In interpreting a moving average, traders are most concerned with its slope.
