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.

BOP Indicator Analysis

Balance of Power Indicator Analysis & How to Generate Signals

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

Center is marked as zero line, levels oscillating above or below are used to generate 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 Signals with BOP Indicator Analysis

Buy Signal

When the ##Balance--of--PowerBOP crosses above zero a buy signal is given.

Also when ++Balance--of--PowerBOP Indicator Analysis is rising, the market is in an upwards trend, some traders use this as a buy signal but it is best to wait for the confirmation by the 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 Signal

When ##Balance--of--PowerBOP crosses below zero a sell signal is given.

Also when ++Balance--of--PowerBOP 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.

Sell and Buy Signals - BOP 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:

BOP Indicator Analysis Classic Divergence - Trend reversal signal

BOP Indicator Analysis Hidden Divergence - Trend continuation

FX Overbought/Oversold Conditions with Balance of Power Indicator

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

• BOP Indicator Analysis Overbought/Oversold 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 oversold levels around those values.

However, price may also stay at these overbought and oversold levels and continue moving in that 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 BOP Indicator Analysis showed the price was oversold, price continued heading downwards until the indicator crossed over to above Zero.

Analysis - ++Balance--of--PowerBOP Indicator Analysis