Balance Of Power Indicator -

Balance Of Power Indicator

Balance of power indicator is developed to measure the balance of bears and bulls. This was introduced by Igor Livshen. He used this method to analyze extreme movement in a period of time. This indicator represents an oscillator and histogram and has offers binary traders lots of trading potential.

Balance Of Power Strategy

Balance power strategy is when no one state, region or nation can dominate another. This offers complete balance and helps in keeping a check. The balance of power indicator is done understanding the parallels of one reaching high and the other is down. This indicator presents MACD that is useful also for binary options trading. The strategy is simple as any trade can make extreme moves in comparison to the other, while the balance of power gets tipped in its favor.

Power of Balance Of Power Indicator

The balance of power indicator is very simple and easy to program. It is also suitable for other trading platforms such as binary options brokers. You can calculate the balance of each day and subtract from the opening from closing price and divide it by the high price minus the low price. The balance of each day is displayed as a bar with high and low peaks forming a histogram. Balance of power = closing – opening price/high-low price

Signals of Balance Of Power Indicator

Balance of power indicator gives various kinds of signals that can be used with other indicators and in multiple time frames.

  • It gives signals with convergences, zero line crossovers and divergences.
  • It is also useful to confirm trend direction, measure trend strength and to predict potential areas and corrections for reversal.
  • This may also be used for other technical analysis tools such as binary options tools, trend lines, Fibonacci or candlesticks.

Convergences and Divergences

Convergences take place when the balance of power peaks lower or higher in the market. If there is a down trend and the market makes two lower peaks, you will notice the balance of power also making lower peaks consecutively and this is convergence. However, it also signals that the price will move and reach the recent lows such that it is an ideal time to wait. It may become a strong line.

Divergences make the balance of power appear lesser peak and the assets at a greater peak. The market shows down trend with two lower peaks and the balance of power also follows lower peak, but another peak that is not much low is referred to as divergent indicating potential support and market reversal. Understanding divergences in this trade is not easy for newbie’s.

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