Bears Power
Introduction
Section titled “Introduction”Everyday trading is a battle between buyers (Bulls) and sellers (Bears), with each party pushing prices in their favor. The outcome of this battle determines whether the price ends higher or lower than the previous day. By analyzing intermediate results such as the highest and lowest prices, we can assess how the battle unfolded throughout the day.
Bears Power Oscillator
Section titled “Bears Power Oscillator”To gauge the balance of power between Bulls and Bears and identify potential trend reversals, we can use the Bears Power oscillator developed by Alexander Elder in his book titled Trading for a Living. Elder derived this oscillator based on the following premises: (1) Bears dominate when prices are below the 13-period exponential moving average (EMA), and (2) the difference between the lowest price and the 13-period EMA represents the Bears Power.
Using Bears Power with Trend Indicators
Section titled “Using Bears Power with Trend Indicators”It is recommended to use the Bears Power oscillator in conjunction with a trend indicator, such as the Moving Average. The first step in calculating this indicator is to determine the 13-period EMA. In a downtrend, when the lowest price is below the EMA, the Bears Power is negative and the histogram is positioned below the zero line. Conversely, when the lowest price rises above the EMA during price growth, the Bears Power becomes positive, and the histogram rises above the zero line.