Developed by Dr Alexander Elder, the Elder-ray indicator measures buying and selling pressure in the market.
Dr Elder uses a 13-day exponential moving average (EMA) to indicate the market consensus of value. Bull Power measures the ability of buyers to drive prices above the consensus of value. Bear Power reflects the ability of sellers to drive prices below the average consensus of value. The bull and bear power is reflected in the form of an oscillator.
This indicator can be configured to show either the Bulls power or Bears power. The recommended way to use this indicator is to have two instances, one showing each bull and bear power, and an additional moving average on the price chart.
- Moving Average – The number of periods to use for the moving average. The default value is 13.
- Use SMA – Use a simple moving average. Set to true/yes to use a simple moving average, or false/no to use an exponential moving average. The default value is false/no.
- BearPower – Reflect bear power or bull power. Set to true to show bear power, or false to show the bull power. The default value is false.
- Use in conjunction with a 13 point MA. Originally designed for Day time frame but can be used on any.
- Buy when 13-point MA is moving up and Bear power is negative but increasing in value to positive.
- Buy on bullish divergence in Bear power, wait for MA to turn upwards.
- Sell when 13-point MA is moving down and Bull power is positive but decreasing value into negative.
- Sell on bearish divergence in Bull power, wait for MA to turn downwards.