Bull vs Bear Power by DGT Indicator by dgtrd

The slope of the EMA can also be used in both cases to help confirm the direction of the trend. On the evening of June 26, 2024, here is how the EUR/USD currency pair on the H1 time frame looked like. In addition to the bull and bear power indicators, the Bollinger Bands channel indicator with default settings was added to the chart. Divergences between bull or bear power and prices indicate the best trading opportunities using the Elder-ray index. Equally important is the slope of the exponential moving average, as direction indicates the general trend. As with any technical indicator, Elder-ray is best used with other forms of fundamental or technical analysis and not as a standalone tool.

What Is the Elder-Ray Indicator?

Based on these assumptions, Dr. Alexander Elder developed Bulls Power as the difference between the maximum price and the exponential moving average to confirm the trend. A value greater than zero means that buyers dominate, and the price is going up. A value less than zero means that sellers dominate the market, and the price is declining.

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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 https://investmentsanalysis.info/ 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.

Bull Bear Power with Optional Normalization Function

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.

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.

On Balance Volume: How to Use OBV Indicator Guide

But a bear market doesn’t always indicate that a recession is coming. In recent history, a recession has followed a bear market about 70% of the time. In interpreting a moving average, traders are most concerned with its slope.

• This script was requested based on what I previously had in my other scripts.
• Stocks, in reality, were subjected to a prolonged sell-off in the first three trading sessions of August, leading up to Monday.
• Bears Power is a fully unbounced oscillator with a base value of 0 and has no lower or upper limit.
• Remember that price is a consensus among investors of value for any given security at a particular point in time.
• A value greater than zero means that buyers dominate, and the price is going up.
• In addition to the EMA, you can set a simple moving average (MA), as well as linearly weighted (LWMA) and smoothed (SMMA) moving averages.

Since World War II, it has taken about two years on average for the stock market to recover, or reach its previous high. The most recent bear market, which started in March 2020, was exceptionally short, ending in August when stocks closed at record highs. The previous bear market, the Great Recession, on the other hand, didn’t see a recovery for about four years. A bear market is often caused by a slowing economy and rising unemployment rates. During this period, investors generally feel pessimistic about the stock market’s outlook, and the changes in the stock market may be accompanied by a recession.

I did do some tweaks based on some assumptions of what I think it will be used for. To navigate the complex world of forex trading, you need the… Trading in the Forex market isn’t confined to trend identification alone,… In the dynamic realm of cryptocurrency trading, success hinges not only… In the fast-paced realm of forex trading, volatility is often seen…

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. Bull bear power 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 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.