Bear Bull Power Indicator[contentblock id=1]
The Bear Bull Power Indicator reveals whether the sellers or buyers that are in the field have the power, and this leads to price breakouts in the given directions.
When the buyers are trying as much as possible to raise the prices of the available currency and the price range towards the end of a period is above the Exponential moving average (EMA) for that period, they will be successful in raising the prices.
Bull power= Highest price (for 13 periods) EMA (13 period)
When the sellers present in the market are trying as much as possible to reduce the price of that currency and the final price is lower than the EMA for that given period, then they will be successful in reducing the price.
Bear Power= the Lowest price (13 periods) EMA (13 periods)
Observing the divergence between Bull/Bear power indicators and the prices is a powerful means that can be used to trade Bull Bear power.
When in a downtrend, you are to look for the divergence between bear power and the prices.
When in uptrends, you are to look for the divergence between the bull power and the prices.
Referring to MT4 chart shown, check the left side where there is a red vertical line, the divergence is identified by making use of purple arrows.
The prices are making the lower lows and you expect to see bear power indicator which is heading towards the lower side of the tandem.
However, the motion of the Bear power is upwards when the prices are downwards.
This is a clear indication of a possible bullish reversal.
A blue line which is across the chart at the bottom is RSI and it is there mainly for added confirmation.
Due to the fact that RSI was below thirty, it showed a signal of oversold condition.
These two indicators are meant to confirm each other at the same time, beautiful bullish reversal is seen.
On the right part of this chart where there is a green vertical line, there is a divergence having brown arrows.
The prices are marking higher highs and you expect to see bull power indicator leading to a higher position in the tandem.
The bull power heads downwards when the motion of the prices was upwards.
This happens to be an indication of possible bearish reversal.
Because RSI was above 70, a signal of overbought condition is seen.
The two seen indicators confirms each other and a bearish reversal is seen.
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