Bears Power Analysis and Bears Power Trading Signals

Developed 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 indicate the maximum power of the Bulls within a price period.

The lowest stock price will indicate 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

Indices Analysis & How to Generate Signals

Sell Trading Signal

A sell stock signal is generated when the oscillator moves below Zero.

In a down trend, the LOW is lower than Exponential MA, so the indicator is below zero and Histogram is located below zero line.

Exit Signal

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

The Triple Screen method for this indicator suggests spotting the stock 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 timeframe). Signals are traded according to the lower time frame but only in direction of the long term trend in the higher chart time frame.