Bears Power / Bulls Power

Overview

Bears Power and Bulls Power — collectively known as the Elder-Ray Index — measure the strength of buyers and sellers relative to a 13-period EMA, helping traders assess the balance of power at any given moment. Developed by Alexander Elder, this system works best when the EMA is trending and one of the power readings dips to near zero in the trend direction. Combine it with the Force Index for the full Elder trading system across stocks and forex.

How It Works

Bulls Power = High − 13-period EMA. Bears Power = Low − 13-period EMA. Bulls Power is normally positive in uptrends (highs above EMA) and Bears Power is normally negative in downtrends (lows below EMA). The key signal comes when the weaker side dips slightly in the direction of the trend.

Key Signals

• Buy when EMA is rising and Bears Power is negative but rising toward zero.
• Sell when EMA is falling and Bulls Power is positive but falling toward zero.
• Divergence between Bears/Bulls Power and price warns of trend exhaustion.

Common Mistakes

• Using Bears/Bulls Power without the EMA trend filter — directional context is essential.
• Trading solely when power crosses zero — the best signals occur near zero, not at zero.
• Applying Elder-Ray on very short timeframes where the 13 EMA is too noisy.