Bulls Power Analysis and Bulls Power Signals
Created and Developed by Alexander Elder
Bulls Power is used to estimate power of Bulls (Buyers). Bulls Power measures the balance of power between the bulls & bears.
This indicator aims at identifying if a bullish trend will continue or if the trading price has reached a point where it may reverse.
Calculation
A Price bar has 4 parameters: the Opening, Closing, High and Low of the price bar.
Every price bar either closes higher or closes lower than previous and prior price bar.
The highest price will mark and show the maximum power of Bulls within a trading period.
The lowest price will mark and show the maximum power of Bears(Sellers) within a trading period.
This Indicator uses the High of the price & a MA (Exponential Moving Average)
The moving average(MA) illustrates the middle ground between sellers & buyers for a certain price period.
Hence:
Bulls Power = High Price - EMA
Bulls Power
Technical Analysis and How to Generate Signals
Buy Signal
A buy trade signal gets derived & generated when Bulls Power oscillator technical indicator goes above Zero.
In an upwards trend, the HIGH is higher than EMA, so the Bulls Power is above zero and Histogram is located above zeroline.
Exit Signal
If the HIGH falls under Exponential MA(Moving Average) then it means that prices are beginning to drop, the Bulls Power histogram falls below zeroline.
The Triple Screen method for this technical indicator suggests spotting the price trend on a higher chart time frame interval (like daily time frame) and applying the bulls powers on a lower chart time frame interval (like hourly time frame). Signals are traded and transacted according to the indicator but only in direction of the long term trend on the higher chart time=frame.
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