BOP Indicator Analysis Technical Analysis and Signals

BOP Indicator Analysis measures the strength of the bulls versus the bears by assessing the ability of each to push price to extreme levels.

Balance of Power Indicator Analysis - Place Balance of Power Indicator in Chart

Balance of Power BOP Indicator Analysis

Balance of Power Indicator Analysis & How to Generate Signals

When using this Balance of market Power trading indicator, zero line crossovers are used to generate trading signals.

Center is marked as zero line, levels oscillating above or below are used to generate trade signals.

Buy - The scale is labeled from 0 to +100 for bullish market movements

Sell - The scale is marked from Zero to -100 for bearish market movements

How to Generate Buy & Sell Trading Signals with Balance of Power BOP Indicator Analysis

Buy Trade Signal

When the Balance of Power (BOP) crosses above the zero a buy trade signal is given.

Also when Balance of Power(BOP) Trading Indicator Analysis is rising, the market is in an upwards trend, some traders use this as a buy trade signal but it's best to wait for the confirmation by the trading indicator moving above the zero mark. As this will be a buy signal in bearish territory and this type of signal is more likely to be a whipsaw fakeout.

Sell Trading Signal

When (BOP) crosses below zero mark a sell signal is given.

Also when Balance of Power(BOP) Trading Indicator Analysis is declining, the market is in a downwards trend, some traders use this as a sell signal but it is best to wait for a confirmation by moving below zero mark because this will be a sell signal in bullish territory & this type of signal is more likely to be a whipsaw fakeout.

Balance of Power Indicator Analysis

Sell and Buy Signals - BOP Trading Indicator Analysis

Divergence Trading

In trading, divergences between the BOP Indicator Analysis and price can be used to effectively spotting potential reversal and/or trend continuation points in currency movement. There are different types of divergences:

Balance of Power BOP Indicator Analysis Classic Divergence Setup - Trend reversal setup

Balance of Power BOP Trading Indicator Analysis Hidden Divergence Setup - Trend continuation

FX Overbought/Oversold Conditions with Balance of Power Indicator

This BOP Indicator Analysis can be used to identify potentially overbought & over-sold conditions in price movement.

Balance of Power BOP Indicator Analysis Overbought/Over-sold levels can be used to provide an early warning for potential trend reversals.
These levels are generated when indicator clusters its tops & bottoms thus setting up the overbought and over-sold levels around those values.

However, price may also stay at these overbought and oversold levels and continue heading in that particular direction for a while and thus its always good to wait until the Balance of Power Indicator Analysis crosses over the Zero mark.

From the example below, even though the Balance of Power (BOP) Trading Indicator Analysis showed the market price was over-sold, price continued heading downwards until the technical indicator crossed over to above Zero.

Overbought/Oversold conditions - Balance of Power Indicator Analysis

Analysis - Balance of Power(BOP) Trading Indicator Analysis

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