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Balance of Power Indicator

Based on Igor Livshin's article in the August 2001 issue of Technical Analysis of Stocks and Commodities.  According to Livshin, "The balance of power (BOP) indicator measures the strength of the bulls vs. bears by assessing the ability of each to push price to an extreme level."  Livshin recommends a 14-period moving average, though the number of periods varies depending on the nature of the market and the time frame. A change in the BOP trend serves as a warning signal and should be confirmed by a change in the price direction.

 

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