Bears Power Analysis & Bears Power Signals

Developed by Alexander Elder

Bears Power is used to gauge power of the Bears (Sellers). Bears Power measures the balance of power between the bulls & bears.

This indicator aims at identifying if a bearish trend will continue or if the price has reached a point where it might reverse.

Calculation

A Price bar has four parameters: the Opening, Closing, High & Low of the price bar.

Each Price bar either closes higher or lower than the previous price bar.

The highest price will indicate the maximum power of the Bulls within a price period.

The lowest price will indicate the maximum power of the Bears within a price period.

This indicator uses the Low of the price and a Moving Average (Exponential MA)

The moving Average represents the middle ground between sellers & buyers for a certain price period.

Therefore:

Bears Power = Low Price - Exponential MA

Stocks Analysis & How to Generate Signals

Sell Signal

A sell signal is generated when oscillator moves below Zero.

In a down trend, the LOW is lower than EMA, so the indicator is below zero & Histogram Oscillator is located below zero line.

Exit Signal

If the LOW moves above the EMA then it means that price are starting to rise, the histogram rises above the zero line.

The Triple Screen method for this indicator suggests identifying the price trend on a higher chart interval (like daily time frame) and applying the bears power signals on a lower chart timeframe interval (like hourly time frame). trading Signals are traded according to the lower time frame but only in direction of the long term trend in the higher chart time-frame.