Balance of Power (BOP)
Last updated
Last updated
Balance of Power (BOP) measures the strength of buying and selling pressure. It shows who controls the market — the bulls 🐂 or the bears 🐻. The indicator moves above and below a zero line, signaling shifts in momentum.
Above Zero ➔ Bulls are in control (buying pressure dominates).
Below Zero ➔ Bears are stronger (selling pressure dominates).
Near Zero ➔ Balance between buyers and sellers; a potential trend reversal may happen.
BOP often fluctuates quickly, helping traders see minor shifts before they appear on price charts.
Rising BOP ➔ Strengthening bullish momentum.
Falling BOP ➔ Increasing bearish pressure.
Flat or neutral BOP ➔ Market is undecided; wait for confirmation.
It's best to combine BOP with other tools like moving averages or trend indicators to avoid false signals.
Default settings usually work fine (with a smoothing period like 14), but you can adjust the smoothing if the chart looks too noisy or too slow.
Entry Signals: Enter long when BOP crosses above zero after being negative, showing bulls are gaining control.
Exit or Short Signals: Enter short when BOP drops below zero after being positive.
Confirmation Tool: Use BOP alongside price patterns or trendlines for stronger setups.
Example: If you see a bullish candlestick pattern and BOP crosses above zero ➔ stronger reason to go long.
Trading without confirmation: Never rely only on BOP for entries. Confirm with price action or other indicators.
Ignoring the trend: BOP can fluctuate a lot in sideways markets, causing false signals. Always check the bigger trend.
Balance of Power is a simple but powerful tool to measure market pressure. It’s easy to understand and can boost your timing when combined with other strategies. Remember, always trade smart — never depend on one indicator alone!
