Balance of Power Indicator Forex Analysis Technical Analysis and Forex Trading Signals
Balance of Power Indicator Forex Analysis measures the strength of the bulls versus the bears by assessing the ability of each to push price to extreme levels.
Balance of Power Indicator Forex Analysis
Balance of Power Indicator Technical Analysis and How to Generate Signals
When using this Balance of market Power trading indicator, the zero line crossovers are used to generate Forex signals.
The center is marked as the zero line, levels oscillating above or below are used to generate trading signals.
Buy – The scale is marked from Zero to +100 for bullish market movements
Sell – The scale is marked from Zero to -100 for bearish market movements
How to Generate Buy and Sell Signals with Balance of Power Indicator Forex Analysis
Buy Signal
When the BOP crosses above zero a buy signal is given.
Also when the Balance of Power Indicator Forex Analysis is rising, the market is in an upwards trend, some traders use this as a buy signal but it is best to wait for the confirmation by moving above the zero mark. As this will be a buy signal in bearish territory & this type of signal is more likely to be a whipsaw.
Sell Signal
When BOP crosses below zero a sell signal is given.
Also when the Balance of Power Indicator Forex Analysis is declining, the market is in a downwards trend, some traders use this as a sell signal but it is best to wait for a confirmation by moving below the zero mark because this will be a sell signal in bullish territory and this type of signal is more likely to be a whipsaw.
Sell and Buy Signals - Balance of Power Indicator Forex Analysis
Divergence Forex Trading
In forex trading, divergences between the Balance of Power Indicator Forex Analysis and price can be used to effectively identifying potential reversal and/or trend continuation points in currency movement. There are several types of divergences:
Balance of Power Indicator Forex Analysis Classic Divergence - Trend reversal signal
Balance of Power Indicator Forex Analysis Hidden Divergence - Trend continuation
FX Overbought/Oversold Conditions with Balance of Power Forex Indicator
This Balance of Power Indicator Forex Analysis can be used to identify potentially overbought and oversold conditions in price movement.
- Balance of Power Indicator Forex Analysis Overbought/Oversold levels can be used to provide an early warning for potential trend reversals.
- These levels are generated when the indicator clusters its tops and bottoms thus setting up the overbought and oversold levels around those values.
However, price may also stay at these overbought and oversold levels and continue moving in that direction for a while and thus its always good to wait until the Balance of Power Indicator Forex Analysis crosses over the Zero mark.
From the example below, even though the Balance of Power Indicator Forex Analysis showed the price was oversold, price continued heading downward until the trading indicator crossed over to above Zero.
Technical Analysis - Balance of Power Indicator Forex Analysis
