If the market is dominated by bulls, the price is rising. Bears, on the other hand, signal a drop in asset value. Another important advantage of the bull-bear indicator is the ease of working with this tool, as it does not require any additional settings during installation. The bull-bear indicator does not work in a flat market. It shows trend phenomena and is especially effective in divergence trading when a trade is opened in the direction of the indicator’s movement.
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- 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.
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- However, you may pre-empt the reversal of a trend quite early through divergence.
- The indicators take into account the asset’s high and low prices as well as 13-period exponential moving average.
On LiteFinance trading platform, Bears Power is denoted by “BE” (upper histogram reflects bears’ power), Bulls Power is denoted by “BU” (lower histogram represents bulls’ power). On the trading platform, Index Bull Bull Bear Power are two different indicators. They are histograms, which are built relative to the middle zero horizontal line.
IC Markets are my top choice as I find they have tight spreads, low commission fees, quick execution speeds and excellent customer support. Remember, each trading strategy has different interpretations. And the Bull Bear Power Indicator should not be used alone. Combine it with other methods for the best results. Practice using the indicator on different charts & timeframes for proficiency and improved trading strategies.
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As previously discussed, there are two main market mind-sets, bullish and bearish, and this indicator measures the actual strength of these market sentiments. Trading financial products on margin carries a high degree of risk and is not suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your risk. Trading financial products on margin carries a high risk and is not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
This strategy is discussed in general terms in many sources, but it has nuances. Visually, it is convenient to draw divergence lines at a minimum scale. However, when looking for trading signals, it is more convenient to use bars that coincide with the candlestick height.
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Short-term extremes in prices indicate overbought and oversold conditions. They occur when the price of a currency on the Forex market has gone too high or too low. For an experienced trader, such market conditions indicate that a reverse reaction should be expected and a trend reversal is inevitable. Therefore, indicators that determine overbought and oversold levels are extremely important for building competent trading strategies.
Elder-Ray is best used with other forms of fundamental or technical analysis and not as a standalone tool. Get the latest Alibaba Group stock forecast for 2024. Read the latest foreign currency trading forecast for 2024.
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Low is the lowest point of the shadow, which corresponds to the lowest price of the candle. High indicates the highest price and is located at the highest point of the shadow. The very fact of the first condition indicates that the strength of buyers is fading, and the price may fall.
Both histograms are located below the price chart. By measuring the distance from the high price of the day to the EMA, bull power represents the capacity of bulls to push prices above the average price. Bull power rises when bulls are stronger and falls when they are weaker. All information shown on this page is for illustrative purposes only and should not be construed as investment, financial, market or other advice. Learn to implement the Bull and Bear power indicator in your trades with a free TradingMoon demo account.
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The trade with a minimum volume of 0.01 lot brought 0.96 USD or about 15 pips of profits, including the swap and spread. Become our client, start trading, and participate in the anniversary contest. Alexander Elder, M.D., is a professional trader whose books include The New Trading for a Living. Dr. Elder was trained as a psychiatrist and served on the faculty of Columbia University.
- In addition to the EMA, you can set a simple moving average (MA), as well as linearly weighted (LWMA) and smoothed (SMMA) moving averages.
- The formula uses high-price, as the bulls push the quote up, based on which, they determine the maximum prices.
- Bull and bear power indicators are a trend confirming tool in the Forex market.
- A value less than zero signals that the market is dominated by sellers, which means prices may decline.
If you are looking to trade forex online, you will need an account with a forex broker. If you are looking Bull bear power for some inspiration, please feel free to browse my best forex brokers. I have spent many years testing and reviewing forex brokers.
Increasing values of the Bulls Power indicator says that buyers prevail in the market. An increase in Bears Power, on the contrary, indicates that there is an increase in sales in the market, so the price will decrease. Let’s have a look at the AUD/USD currency pair on the H4 time frame. The 9-period EMA is taken as the main trend instrument.
Preguntas frecuentes sobre indicadores Bulls Power y Bears Power
Find out what the prospects are for this currency pair. To check the profitability of signals and improve your trading skills, practice on a demo account first. Elder’s approach in his book “Trading for a Living”. If the yellow line on the chart crosses the blue one and continues to move upward, it is worth buying assets. If the yellow line crosses the blue one in a downward direction, a more profitable step would be to sell. When prices are moving but the indicator isn’t, it’s a sign of weakness.
Each camp has its philosophy and view of the future of the global economy. The Elder-Ray Index is the bull-bear power indicator. It shows the buyers’ and sellers’ trader market behavior over a certain period.
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 bulls power indicator has drawn two lower highs above zero. The price has formed two higher highs, creating a divergence. In this case, the price will highly likely reverse to the downside.