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What is Bulls Power?

Bulls Power is a technical indicator to measure the power of Bulls or Buyers and to determine the balance between buyers and sellers in a given market.

By finding a middle ground, the indicator will signal a beginning, continuing, or potential reversal of a bullish trend.

What makes the Bulls Power Indicator?

Bulls Power is made up of the following components:

• Zero line.
• Curve, area, dots, or histogram oscillating about a zero line.

Basic Signals Provided by Bulls Power.

To generate a trading signal from Bulls power, just observe the behavior of the Bulls Power curve, area, dots, or histogram in relation to the zero line.

Bulls Power indicator is designed to only give BUY signals

When the curve, area, dots, or histogram of Bulls Power crosses from below to above the zero line, then such is a bullish signal.

Bulls Power does not give bearish signals but rather, signals to exit buy trades entered after it gave the bullish signal.

So how do these exit signals look like?

If the Bulls Power curve, area, dots, or histogram begins to cross from above to below the zero line, then that is a possible reversal point of the bullish trend.

Consider that the signal to exit your Buy position.

Bulls Power Trading Strategies.

The Bulls Power indicator is a popular tool used by traders to formulate various trading strategies.

Olymp Trade traders have access to this tool from the Olymp Trade platform and are therefore free to use it to draft profitable trading strategies.

One thing I want us to agree on is that there might be as many trading strategies based on the Bulls Power indicator as there are traders who know about the tool.

But the question of whether all of them are effective and profitable comes in to separate the chaff from real wheat.

Out of the thousands of strategies derived from the bulls power oscillator, which are the top 5 strategies to use consistently?

Top 5 Bulls Power Trading Strategies for Olymp Trade.

• The Bulls Power Divergence Trading Strategy.
• Bulls Power with EMA Trading Strategy.
• Bulls Power with Parabolic SAR Trading Strategy.
• The Bulls Power-Alligator Trading Strategy.
• Bulls Power-ADX Trading Strategy.

1. The Bulls Power Divergence Trading Strategy.

Bulls Power divergence occurs where the Bulls Power indicator does not directly reflect what is happening on the price.

This is to say that where the price is making lower lows, the Bulls Power is making higher lows. Such is called a bullish divergence.

On the other hand, where the price is making higher highs, the Bulls Power is making lower highs. Such is called a bearish divergence.

Note that the Bulls Power measures the power of Bulls or Buyers and therefore determines the balance between them and the Bears or Sellers.

Bearish signals given by the Bulls Power do not mean that we should sell but rather, exit any buy positions in play.

That said, only bullish Bulls Power divergences are useful to bull power traders.

Step 1 – Signal.

The first step of this strategy is looking for a trading signal.

Bulls Power gives only bullish divergences as the entry signal.

A bearish divergence from the Bulls Power is an exit signal and not a sell signal. The bullish divergence signal is as follows:

• Bullish Bull Power divergence – in a bullish Bulls Power divergence, prices make lower lows as the Bulls Power makes higher lows which must culminate in the Bulls Power curve, dots, area, or histogram shifting from below to above the zero line.

Meaning, price is in a downtrend but the fact that the Bulls Power is making higher lows which should read on the positive side of the tool means that the bulls are gaining momentum relative to the bears and chances are that an upward trend reversal is coming up.

 

Step 2 – Confirmation.

It is not always that a bullish Bulls Power divergence resulting in a positive shift of the Bulls Power reading will cause an upward trend reversal.

That is why you need to confirm the bullish divergence signal you get from step 1. Here is how to confirm:

• Bullish signal confirmation – the price is making lower lows as the Bulls Power makes higher lows.

Draw a trend line joining the lows of the price which must be sloping downwards.

Identify the corresponding highs of the section on which you have drawn the trend line joining the lows and draw another trend line joining those highs, which must also be sloping downwards.

For confirmation that the bullish divergence will cause an upward reversal, the price must break the trend line joining the highs upwards.

Step 3 – Entry.

Enter a buy position following the confirmation of the bullish Bulls Power divergence signal.

Step 4 – Exit.

Exit the Buy position once the Bulls Power curve, dots, area, or histogram shifts from the positive side above the zero line to the negative side below the zero line.

2. Bulls Power with EMA Trading Strategy.

This strategy, as the name suggests, brings together the Bulls Power indicator and the Exponential Moving Average (EMA) to form a trading strategy.

Exponential Moving Average (EMA).

The Exponential Moving Average is a technical indicator that calculates and shows the average of a given range of prices of an asset over a specified number of periods.

In this strategy, the EMA used is applied to 13 periods.

EMA is different from other moving averages because it places a greater significance on the most recent data in its calculation, making it a more preferable moving average.

EMA presents in the form of a continuous line on the main chart.

The calculations are presented in the form of a line connecting the results of the calculations in a smoothed continuous line.

When the EMA is sloping upwards and the price is trading above it, then the market is on an uptrend.

However, when the EMA is sloping downwards and the price is trading below it, then the market is on a downtrend.

The Strategy.

The primary tool for our strategy will be the EMA.

Signals we obtain using the EMA will then be confirmed using the Bulls Power.

Step 1 – Signal.

Bulls Power, as we had earlier mentioned, deals with only bullish entry signals.

Signals which would appear as bearish and related to the tool are only exit signals from any buy position.

Here is how the bullish signals appear :

• Bullish EMA signal – for a bullish EMA signal, the 13-period Exponential Moving Average must be sloping upwards and the price having crossed to trade above it.

Step 2 – Confirmation.

We can then proceed to use the Bulls Power tool to confirm the bullish signal obtained using EMA.

Here is how to confirm the signal:

• Bullish signal confirmation – the curve, area, dots, or histogram of Bulls Power must have recently crossed from below to above the zero line.

Step 3 – Entry.

Enter a buy position after the successful confirmation of the bullish signal.

Step 4 – Exit.

Exit the Buy position once the Bulls Power curve, dots, area, or histogram shifts from the positive side above the zero line to the negative side below the zero line.

Alternatively, exit the buy position once the price crosses over to begin trading below EMA 13.

3. Bulls Power with Parabolic SAR Trading Strategy.

The Bulls Power indicator and the Parabolic SAR indicator are blended together in perfect harmony to trade profitably in this strategy.

Parabolic SAR.

Parabolic SAR means parabolic Stop and Reverse.

It is a technical analysis tool that determines the direction the price of an asset is moving.

It does so by showing potential reversal points of the price, where the current trend ceases and a new one begins to form.

The Parabolic SAR is represented by dots that correspond to each candlestick that forms.

It is those dots that it uses to show potential price reversal points, but how?

Usually, whenever the Parabolic SAR dots are above the price of an asset, such price is on a downtrend.

Conversely, whenever the Parabolic SAR dots are below the price, such price is on an uptrend.

Meaning, where the dots of the parabolic SAR were above the price of an asset but a new dot forms below the price, an uptrend has just begun.

On the contrary, where the dots were below the price but a new dot forms above the price, a downtrend has just begun.

The Bulls Power with Parabolic SAR Strategy.

For this strategy, we shall use the parabolic SAR as the primary indicator. And the Bulls Power indicator for signal confirmation.

Step 1 – Signal.

• Bullish Parabolic SAR signal – to resort to a bullish signal, the parabolic SAR dots must shift from above the price to below the price.

Note also that a reasonable number of parabolic SAR dots must have formed below the price before you can be interested in such a signal.

I say that because, at times, the dots keep shifting from above to below the price and then back above the price again, leaving the trader confused.

Step 2 – Confirmation.

Do you have your bullish signal ready?

The next thing is to have it confirmed by the Bulls Power indicator before you proceed to enter a trade.

Here is how to confirm the signal:

• Bullish signal confirmation – the curve, area, dots, or histogram of Bulls Power must have recently crossed from below to above the zero line.

Step 3 – Entry.

Enter a buy position after the successful confirmation of the bullish signal.

Step 4 – Exit.

Exit the Buy position once the Bulls Power curve, dots, area, or histogram shifts from the positive side above the zero line to the negative side below the zero line.

Alternatively, exit the buy position once the parabolic SAR dots shift from below to above the price and a reasonable number of them form above the price.

4. The Bulls Power-Alligator Trading Strategy.

This particular strategy combines the Bulls Power indicator with the Alligator indicator into one powerful trading strategy. 

The Alligator.

The Alligator is a trend technical analysis tool that uses three smoothed moving averages.

It will show you the direction of the general trend so that you can trade in that direction and profit from the trend.

It also shows you possible trend reversals so that you can catch a new trend as early as possible for maximum gain.

The Alligator indicator is represented by three lines of different colors on the chart.

Those lines are the tool’s moving averages we are talking about, which show the trend direction and possible reversals depending on their orientation and direction.

In any setting, the three moving averages of the Alligator will arrange themselves such that the lip (green line) is closest to the price, followed by the teeth (red line), and then the jaw (pale blue line).

What that means is that if you spot the three lines arranged in an ascending order from the jaw to the lip, then the market is on an uptrend.

Conversely, where the three lines arrange themselves in a descending order from the jaw to the lip, then the market is on a downtrend.

The aspect of reversal comes in where you spot the three lines changing from one order to another.

This implies a change from one trend to another and so a possible trend reversal from the incumbent trend to the opposite.

The Bulls Power-Alligator Strategy.

We shall use the Alligator as the primary indicator to generate signals. We shall then confirm such signals with the Bulls Power indicator before entry.

Step 1 – Signal.

• Bullish Alligator signal – the three lines of the Alligator indicator must shift from a descending order of jaw (pale blue), teeth (red), and lip (green) to an ascending order of jaw (pale blue), teeth (red), and lip (green).

It is even a stronger signal when the price shifts from below the three lines to above the three lines after the order of the lines has been met as specified.

Step 2 – Confirmation.

Did a perfect bullish signal form as specified above?

Proceed to confirm that signal.

• Bullish signal confirmation – the curve, area, dots, or histogram of Bulls Power must have recently crossed from below to above the zero line.

Step 3 – Entry.

Enter a buy position after the successful confirmation of the bullish signal.

Step 4 – Exit.

Exit the Buy position once the Bulls Power curve, dots, area, or histogram shifts from the positive side above the zero line to the negative side below the zero line.

Alternatively, exit the buy position once the lines of the Alligator begin coming closer to each other and shifting from the ascending order of jaw, teeth, and lip to the descending order of jaw, teeth, and lip.

5. Bulls Power-ADX Trading Strategy.

This strategy, as the name suggests, blends the Bulls Power indicator with the Average Directional Index (ADX) for profitable trading. 

Average Directional Index (ADX).

The Average Directional Index is a chart analysis tool that helps measure the strength of a trend, whether uptrend or downtrend.

The indicator is made up of the ADX curve/histogram/area/dots, the +DI curve/histogram/area/dots and the -DI curve/histogram/area/dots.

The three elements oscillate between 0 and 100.

In brief, the ADX oscillator will be represented by three lines crossing over each other and moving on a scale that runs from 0 to 100.

The ADX oscillator and all its components will not display on the main chart but on a window separate to and below the main chart.

Basically, you will be using the ADX to measure the strength of an uptrend or a downtrend.

It will be an uptrend if the +DI element is above the -DI element.

Conversely, it will be a downtrend if the -DI element is above the +DI element.

Have you established which trend it is using the +DI and the -DI relations?

The next thing is to measure the strength of that trend using the ADX curve, histogram, area, or dots.

A reading of the ADX element below 20 translates to a weak trend while a reading above 50 means the trend is strong.

A +DI element above a -DI element coupled with a reading of above 50 of the ADX element means that the market is strongly trending upwards.

On the contrary, A -DI element above a +DI element and a reading of ADX element above 50 means that the market is strongly trending downwards.

The Strategy.

The primary indicator here will be the Bulls Power indicator.

The signal we obtain from the Bulls Power will be confirmed using the Average Directional Index (ADX).

Step 1 – Signal.

• Bullish Bulls Power signal – the curve, area, dots, or histogram of Bulls Power must cross from below to above the zero line.

Step 2 – Confirmation.

• Bullish signal confirmation – the +D element of the ADX must be above the -D element. That way, you are sure that the price is trending upwards with huge strength.

Step 3 – Entry.

Enter a buy position after the successful confirmation of the bullish signal.

Step 4 – Exit.

Exit the Buy position once the Bulls Power curve, dots, area, or histogram shifts from the positive side above the zero line to the negative side below the zero line.

Alternatively, exit the buy position once the ADX reading dips below 20 or the +D components dips below the -D component of the ADX.

Conclusion.

Bulls Power is a popular technical analysis tool used by almost every trader in Olymp Trade.

If you are new to trading and don’t know where to begin then this is a good spot for you.

Use this list post for guidance.

Happy Trading!