Trading currencies online is quite an interesting profession to take it. It is demanding sometimes and offers investors diverse investment opportunities. Traders have been able to pally with so many indicators out there to make their trade experience rich and profitable as well. Two very similar indicators that hardly make sense to a lot of people out there at a first glance on the chart are the Bears Power and the Bulls power. What do they stand for? The market price increases when the Bulls power pushes into the positive, while the market price collapses into the negative the Bear power would suggest a drop in price.

Dr. Alexander Elder developed the Bears power and Bulls power. He actually named his first indicator “Elder-ray” by virtue of its function. As was presented in Dr. Elder’s book “Trading for a Living”, the Elder-Ray helps determine the strength of groups of bulls and bears by looking beyond the surface of the markets for price changes that most times cannot be explained by mere gazing at prices. Dr. Elder was able to use daily data quotes in the calculation of exponential moving average of the 13-days closing prices. In his Bull power concept he explained it as being the day’s high minus the exponential moving average, while the Bear power is the difference between the exponential moving average and the closing price.

When trading the Elder ray some of the basic tips includes: during a long-term directional trend in an upward direction and the Bear power is negative but has increased values a buy is recommended. Another way of saying that price has moved down to a more low minimal value than the past is “Bear Power”.

But how do we know the signals to go bullish or bearish on the Bulls and Bears power indicator?

Well, the secret is to combine both of these together, along with an exponential moving average. Allowing the default 13 is fine (click on reset button on the indicator’s properties to set it back to default). On the indicator we use the 13 EMA to ascertain the direction of the trend and we get on further to focus on the Bulls and Bears Power bars. What we intend on doing is to locate areas in the market where the Bears and Bulls were greediest and then ride on the reversal.

BUY SIGNAL For a buy signal, we must look at the area of the 13 Exponential Moving Averages that’s increasing (moving up). With a Bear power hat’s negative and increasing simultaneously. We can also say when the Bears power is negative and increasing in value at the same time. Look at other feature like when the last peak of the Bulls power is placed above the previous one. With a bulls divergence we get a Bears power surge i.e increase.

SELL SIGNAL For a sell signal, please apply the opposite of what we listed above. If they confirm then a sell trigger is in place.