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Lesson 19 - Power Seller or Bears (Bears Power) / Power Purchaser or the Toros (Bulls Power)

Each transaction represents a battle of price pressure from buyers (bulls) and sellers ("Bears"). Depending on how strong a party with respect to the other close price positively or negatively. If prices moved during the day means that the battle was great and if the price has behaved no major movements, ie flat, means that the forces were balanced or there was a fierce struggle.

is very important to estimate the Power Seller (Bear Branch) as it may mean a turnaround. To this has developed the technical oscillator "Power Seller" (Power of the Bears) by Alexander Elder. Elder used the following principles to develop the technical oscillator:

1 .- Moving Average is a price agreement between buyers and sellers for a certain period of time.

2 .- The lower price of the day indicates the maximum force the vendors had for it. Alexander Elder

developed a differential between the lower price and moving average using a period of 13 days.

Calculation:
The first step is to calculate the exponential moving average, which Alexander Elder recommended a period of 13 days.

BEARS = Low - EMA

Where

BEARS: Bear Branch
Minimum minimum price
day EMA: Exponential Moving Average

In a trend downwards minimum price is less than the EMA, therefore the power of the Bears is less than zero and the histogram is located under the zero line. If the minimum rises above the EMA (when prices rise), the Power of the Bears becomes greater than zero and the histogram is moved over the zero line.

Application

This indicator is recommended to use with other trend indicators like moving averages.

"If the trend is up, Power indicator from the Bears is below zero, but growing, is a buy signal."

Bull Power or Power of the Bulls

Bear Power is exactly equal to the Bulls, only that the opposite. Therefore the formula for the indicator of the Bulls would be:

Calculation:
The first step is to calculate the exponential moving average, which Alexander Elder recommended a period of 13 days.

BULLS = High - EMA

Where

BULLS: Power of the Bulls (buyers)
Maximum maximum price
day EMA: Exponential Moving Average

In an uptrend the maximum price is greater than the EMA, so the power of the Bulls is greater than zero and the histogram is located above the zero line. If the maximum rises above the EMA (when prices are low), the Power of the Bulls becomes less than zero and the histogram moves under the zero line.