As their names show, these indicators determine the power of the bulls and
the bears to move the market up or down respectively. Bulls power is the
difference between the high of the current bar and the 13-period exponential
moving average, while the difference between the low of the current bar and the
13-period exponential moving average. Dr. Alexander Elder who created these
indicator points out that the high of the bar shows the maximum power of the
bulls, while the low shows the maximum power of the bears. The Exponential
moving average represents the equilibrium of the price. During an uptrend
prices are above the exponential moving average and the indicator has positive
values. During a downtrend prices are below the exponential moving average and
the indicator has negative values.
Bulls and bears power generate the following signals:
Rules for long position
- Price is above the 50-period Moving Average (uptrend) and Bulls power
values are positive (above the 0 line).
- Bears power breaks the 0 line upwards. The bar when this happens is
marked as Signal bar.
- Long position is initiated when the price breaks 2-3 pips above the high
of the Signal bar.
- After the position is open an initial stop loss order is placed 2-3 pips
below the low of the signal bar.
A limit order is placed according to our Money management rules. We can
close the position when the Bears power values become negative again.
Rules for short position
- Price is below the 50-period Moving Average (downtrend) and Bears power
values are negative (below the 0 line).
- Bulls power breaks the 0 line downwards. The bar when this happens is
marked as Signal bar.
- Short position is initiated when the price breaks 2-3 pips below the low
of the Signal bar.
- After the position is open an initial stop loss order is placed 2-3 pips
above the high of the signal bar.
A limit order is placed according to our Money management rules. We can
close the position when the Bears power values become positive again.
Test
During the test of this strategy with Forex Strategy Builder we found out it
works best on EURUSD 1Hour chart. We changed the exit logic to Trailing Stop
(80 pips). That leaves more space for the position in a volatile market.
Charts
Balance / Equity chart tested by Forex Strategy Builder
Indicator chart
Parameters, Statistics, Strategy Slots
See the full Strategy Overview
generated by Forex Strategy Builder.
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