Bears Power and Bulls Power are technical analysis indicators available in the MetaTrader 5. These indicators are designed to assess the strength of sellers and buyers in the market. In this article, Headway experts explain what Bears Power and Bulls Power Oscillators are and how to use them in your trading.
Bears Power Indicator
The Bears Power indicator measures the power of sellers in the market. It’s calculated as the difference between the lowest price and the Exponential Moving Average (EMA), which is usually a 13-period EMA.
The Bears Power oscillator generates negative values. As the oscillator moves lower, it suggests increasing selling pressure or bearish strength. Traders may consider this as a sign of potential downward price momentum or a bearish trend.
Bulls Power Indicator
The Bulls Power indicator measures the power of buyers in the market. It’s calculated as the difference between the highest price and the Exponential Moving Average (EMA), which is usually a 13-period EMA.
The Bulls Power oscillator generates positive values. As the oscillator moves higher, it indicates increasing buying pressure or bullish strength. Traders may interpret this as a sign of potential upward price momentum or a bullish trend.
How to use Bears/Bulls Power in MT5?
There are three ways to make use of Bears and Bulls Power indicators. With them, you can:
🔎 Identify divergences. Look for divergences between the price chart and the Bears Power or Bulls Power indicator. Divergences occur when the price makes a higher high or lower low, but the corresponding oscillator fails to confirm it. Divergences can signal potential trend reversals or trend weakness.
✅ Confirm trends. Use the Bears Power and Bulls Power indicators to confirm the strength of existing trends. If the Bears Power oscillator is consistently negative during a downtrend, it suggests sustained selling pressure. Conversely, if the Bulls Power oscillator is consistently positive during an uptrend, it indicates sustained buying pressure.
🧩 Combine with other indicators. Bears Power and Bulls Power can be used in conjunction with other technical indicators or chart patterns to increase the reliability of trading signals. For example, you could use them alongside Moving Averages, trendlines, or support/resistance levels to confirm potential entry or exit points.
What other indicators to use?
Here are five other technical indicators that can be used best with Bears Power and Bulls Power to enhance your analysis:
Moving Averages (MA). Moving Averages can help identify trend direction and provide additional confirmation. For example, you can use a combination of a longer-term Moving Average (e.g., 50-day or 200-day) to determine the overall trend and a shorter-term Moving Average (e.g., 20-day or 50-day) to identify potential entry or exit points when it aligns with the signals from Bears Power or Bulls Power.
Relative Strength Index (RSI). RSI is a popular momentum oscillator that measures the speed and change of price movements. It can complement the Bears Power and Bulls Power indicators by providing overbought or oversold signals. When RSI reaches extreme levels (typically above 70 or below 30), it can indicate potential reversals or trend exhaustion.
Moving Average Convergence Divergence (MACD). MACD is a versatile indicator that combines trend-following and momentum elements. It consists of two lines (MACD line and signal line) and a histogram. By incorporating the MACD alongside Bears Power and Bulls Power, you can identify potential trend reversals or confirmations when there is a convergence or divergence between the indicators.
Support and resistance levels. Support and resistance levels are horizontal lines drawn on a price chart that represent areas where the price has historically encountered buying or selling pressure. These levels can provide additional confirmation when they align with signals from Bears Power or Bulls Power. For example, if Bulls Power shows increasing strength and the price breaks above a significant resistance level, it can confirm a bullish signal.
Fibonacci retracement. Fibonacci retracement levels are horizontal lines drawn on a price chart based on specific ratios derived from the Fibonacci sequence. These levels can help identify potential price reversal zones or areas of support and resistance. When the Bears Power or Bulls Power indicators align with Fibonacci retracement levels, it can provide additional confirmation for potential entry or exit points.
The effectiveness of these indicators may vary depending on the market conditions and the specific asset you are analyzing. Combine multiple indicators and conduct a comprehensive analysis before making trading decisions.