Balance of Power Indicator

Balance of Power Indicator

The Balance of Power Indicator for MT4 is a technical tool that analyzes the intensity of the buying/selling pressure between the bulls and bears in the market.

The Balance of Power indicator for MetaTrader is an incredible technical trading tool that analyzes the intensity of the buying/selling pressure between the bulls and bears in the market. It evaluates the buying/ selling power of bulls or bears with more potential to move the price of an asset to an extreme level.

The Balance of Power indicator was built to work with the value obtained from the closing – (minus) opening price / high – (minus) low price. It also comes with a default 14-period moving average that oscillates between the positive and negative extreme levels. Therefore, it is very efficient in identifying overbought/oversold levels and a trend continuation/reversal.

Furthermore, the zero-line of the indicator defines the trend bias of the market. Thus, the lime histogram bars above the zero line depict stronger bullish power, while the red histogram bars below the zero line depict more bearish power.

How to Trade With the Balance of Power Indicator

The above image depicts the indicator in action on the EURUSD currency pair in the H4 time frame. It shows how to combine price action with the indicator’s signal to generate a high-probability entry.

The buy signal shows that the lime histogram bars were above the zero-line level, and the entry signal was triggered by the bullish engulfing candlestick pattern. Conversely, the sell signal was valid because the trend was moving to the downside and the red bar of the indicator was also below the zero level. Besides, it also coincides with a bearish engulfing candlestick pattern.

Conclusion
The Balance of Power indicator is a technical trading tool that evaluates the strength of buyers/sellers in the market. Moreover, it would also be beneficial for scalpers, day/intraday, and swing traders in making sound technical analyses. Finally, it is free to download.