There is a daily fight between bulls (buyers) and bears (sellers) on the market. Each day, because of that fight, closing price rises or goes down as compared to the previous day. Bulls always tend to raise the price upward, while bears make all efforts to do just the opposite - lower it.
Bears Power Technical Indicator developed by Alexander Elder assesses the correlation of bears' power and points out to the possibility of trend change. The Indicator is the difference between the lowest and 13-period exponential moving average EMA.
Bears Power Indicator is used along with trend indicators. If the indicator value grows, a purchase signal is produced, bears are gaining power. In this case, it is desirable to have the divergence of bases formed in the indicator chart.
Indicator calculation technique
Exponential moving average is to be calculated the first (it is best if it is a 13-period EMA).
B = L - EMA
Where:
B - bears power;
EMA is exponential moving average;
L is the lowest price of the current bar.
L will be below EMA in case of a downward trend, bears power is below zero line, hence the histogram is located below zero line; in case of an upward trend the situation will be opposite.
