Balance of Power Technical Indicator, BOP Technical Analysis

Balance of Power(BOP) Analysis and BOP Signals

Developed & Created by Igor Livshin

BOP indicator measures the momentum of bulls vs bears by assessing the capability of each to drive price to extreme points.

Balance of Power - Balance of Power Indicator, BOP Technical Analysis

Forex Analysis and How to Generate Signals

When using this indicator, zero line cross-overs are used to generate trade signals.

Center is labeled and marked as Zero mark, levels oscillating above or below are used to generate trading signals.

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

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

How to Generate Buy & Sell Signals

Buy Trade Signal

When Balance of Power(BOP) crosses above zero mark a buy signal is generated.

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

Sell Signal

When Balance of Power crosses below zero mark a sell trade signal is given/generated.

Also when the Balance of Power(BOP) is falling, the market is in a downwards trend, some traders use this as a sell signal but it's best to chill and wait for a confirmation signal by moving below the zero mark because this will be a sell trading signal in bullish region and this type of market trading signal is more likely to be a whipsaw.

Balance of Power (BOP) Indicator, Balance of Power Trading Analysis

Sell & Buy Signals

Divergence Trading

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

Classic Divergence Setup - Trend reversal signal

Hidden Divergence Trading Setup - Trend continuation

Forex Trading Overbought and Oversold Conditions

This BOP can be used to identify the potentially overbought and oversold conditions in price movement.

Overbought Oversold levels can be used to provide and give an early warning for potential trend reversals.
These levels are derived & generated when technical indicator clusters its tops & bottoms thus setting up the overbought & oversold levels around those values.

However, price may & might also stay at these overbought & oversold levels and continue heading in that particular direction for-some time & thus its always good for you to wait until the Balance of Power (BOP) crosses over the Zero-line mark.

From the illustration set-out below, though the Balance of Power(BOP) showed price was oversold, price continued moving downwards until the indicator crossed over above the Zero level.

Balance of Power(BOP) Trading Indicator, Balance of Power Trading Analysis - No Nonsense BOP Technical Analysis

Analysis in FX Trading

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