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Forex-Stocks Market “Bulls & Bears Power” Momentum Trading Strategy

 Forex-Stocks “Bulls & Bears Power” Momentum Trading Strategy – It is advisable to use Bulls Power & Bears Power indicators (combined) together for double confirmation of trading signals.

  • The Bears Power indicator values are calculated by subtracting the current candlestick from the low price of the EMA value. The essence of this formula is to demonstrate the strength of the bears about the average price over a period of a given length. The low price is used in the formula because the bears push the quote down. Therefore, they determine the minimum prices.

  • The Bulls Power indicator calculation is performed by subtracting the high-price of the current candle from the EMA value. Thus, this formula demonstrates the strength of the bulls in relation to the price averaged over a given time interval by the EMA method. The formula uses high-price, as the bulls push the quote up, based on which, they determine the maximum prices.

Both the indicators are drawn in the windows below the chart and displayed as histograms, the length and position of which relative to the 0 level of the columns indicates the relative strength of a particular group of traders.

 

Bulls Power & Bears Power trading strategy

Developed by Dr. Alexander Elder in 1989 and introduced in his book ”Trading for a Living”, the Elder-Ray indicator is comprised by three elements – Bear Power, Bull Power and a 13-period Exponential Moving Average.

As the high price of any candle shows the maximum power of buyers and the low price of any candle shows the maximum power of sellers, Elder uses the 13-period EMA in order to present the average consensus of price value.

  • Bull Power shows whether buyers are capable of pushing prices above the average consensus of value.
  • Bear Power shows whether sellers are capable of pushing prices below the average consensus of value.
  • Bull Power is the result of subtracting the 13-period EMA from the high price of the day.
  • Bear Power is the result of subtracting the 13-period EMA from the low price of the day.

 

How to install the “TraderVersity Bulls & Bears Power System
  • Download “TraderVersity-BullsBearsPowerSystem” (Zip/RAR File).
  • Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
  • Copy the “TraderVersity-BullsBearsPowerSystem.tpl” file (template) to your Metatrader Directory …/templates /
  • Start or restart your Metatrader Client.
  • Select Chart and Timeframe where you want to test your forex system.
  • Right-click on your trading chart and hover on “Template”.
  • Move right to select “TraderVersity-BullsBearsPowerSystem” trading system and strategy.
  • You will see the “TraderVersity-BullsBearsPowerSystem” system is available on your Chart.

 

BUY Setup

When seeking to open buy positions, observe indicator readings as follows:

  • 1st. The market is in a bull trend, as indicated by the 13-period EMA
  • 2nd. Bear Power is in negative territory, but increasing
  • 3rd. The most recent Bull Power top is higher than its prior top
  • 4th. Bear Power is going up from a bullish divergence(The last two conditions are optional)

 

SELL Setup

When seeking to open sell positions, observe indicator readings as follows:

  • 1st. The market is in a bear trend, as indicated by the 13-period EMA
  • 2nd. Bull Power is in positive territory, but falling
  • 3rd. The most recent Bear Power bottom is lower than its prior bottom
  • 4th. Bull Power is falling from a bearish divergence(The last two conditions are optional)

 

Trading NOTES

If you are willing to add to your trading position, you need to:

  • Add to your long position, when the Bear Power falls below zero and then climbs back into positive territory
  • Add to your short position, when the Bull Power increases above zero and then drops back into negative territory.

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