lockwhiz
206 posts
msg #55319
- Ignore lockwhiz
modified |
9/27/2007 10:29:40 PM
By Igor Livshin that can be found on p. 18 of the August 2001 issue of Stocks & Commodities Magazine.
According to Livshin, "The balance of power (BOP) indicator measures the strength of the
bulls vs. bears by assessing the ability of each to push price to an extreme level." Although the
article goes on to describe a somewhat involved calculation of the BOP, it breaks down to nothing more
than...
(CL - OP)/(HI - LO)
This resulting raw BOP value can then be optionally smoothed using any moving average type, and can be
drawn as a line or histogram.
The BOP oscillates between extremes of -1 and +1.
Livshin goes on to make the following statements...
+For Daily charts, a 14 period moving aveage is recommened, though the number of periods varies
depending on the nature of the market and the time frame.
+One of the most important properties of BOP is the level at which it clusters its tops and bottoms.
During bull markets, its tops often reach the upper limit and never reach the bottom level.
During bear markets, the picture is reversed.
+BOP supports price divergence, trends, and overbought-oversold levels.
+A change in the BOP trend serves as a warning signal and should be confirmed by a change in the
price direction.
....or
This was taken from:
http://yepher.com/~yepher/stockfetcher/command-cmddoc.html#ind()
|