Bears Power Analysis and Bears Power Trade Signals
Created by Alexander Elder
Bears Power is used to gauge the power of the Bears (Sellers). Bears Power measures the balance of power between the bulls and bears.
This stock indicator aims at identifying if a bearish trend will continue or if the stock price has reached a point where it might reverse.
Calculation
A Price bar has four parameters: the Opening, Closing, High & Low of the stock price bar.
Each Price bar either closes higher or lower than the prior stock price bar.
The highest stock price will show the max power of the Bulls within a price period.
The lowest stock price will reflect the maximum power of the Bears within a price period.
This stock indicator uses the Low of the stock price & a Moving Average (Exponential Moving Average)
The moving Average represents the middle ground between sellers & buyers for a certain price period.
Therefore:
Bears Power = Low Price - Exponential MA
Index Analysis and How to Generate Signals
Sell Signal
A sell stock signal is generated/derived when the oscillator crosses below Zero.
In a down-trend, the LOW is lower than Exponential MA, so the indicator is below zero & Histogram is located below zero line.
Exit Signal
If the LOW moves above EMA then it means that stock price are beginning to rise, the histogram rises above the zero line.
The Triple Screen method for this trading indicator suggests spotting the stock price trend on a higher chart time frame interval (like daily time frame) and applying the bears power signals on a lower chart time frame interval (like hourly timeframe). Signals are traded and transacted in accordance to the lower timeframe but only in direction of the long term trend in the higher chart time=frame.
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