Bulls Power
Introduction
Section titled “Introduction”Everyday trading involves buyers (Bulls) and sellers (Bears) pushing prices up and down. 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.
Understanding Bulls Power
Section titled “Understanding Bulls Power”To anticipate possible trend reversals, it is crucial to evaluate the balance of Bulls Power. Alexander Elder, in his book ‘Trading for a Living,’ introduced the Bulls Power oscillator as a tool for this purpose. The oscillator is calculated by finding the difference between the highest price and a 13-period exponential moving average (HIGH - EMA).
Using Bulls Power with Trend Indicators
Section titled “Using Bulls Power with Trend Indicators”To enhance its effectiveness, it is recommended to combine the Bulls Power indicator with a trend indicator, such as the Moving Average. The first step in calculating the Bulls Power indicator is to determine the exponential moving average, typically using a 13-period EMA.
Interpreting Bulls Power
Section titled “Interpreting Bulls Power”In an uptrend, when the HIGH is higher than the EMA, the Bulls Power remains above zero, and the histogram is positioned above the zero line. Conversely, if the HIGH falls below the EMA during a price decline, the Bulls Power becomes negative, and the histogram falls below the zero line.