BOP Analysis and Balance of Power Trading Signals

Developed by Igor Livshin

BOP indicator measures the strength of the bulls versus bears by assessing ability of each to push xauusd price to extremes areas.

Gold Analysis and Generating Signals

When using this technical indicator, the zero line crossovers are used to generate signals.

Center is marked as a zero line, levels oscillating above or below are used to generate signals.

Buy - The scale is marked from 0 to +100 for bullish trend market movements

Sell - The scale is marked from Zero to -100 for bearish market movements

How to Generate Buy and Sell Trading Signals

Buy Signal

When the ##Balance--of--PowerBOP crosses above zero a buy signal is given.

Also when the BOP is rising, the market is in an up-wards trend, some traders use this as a buy signal but it is best to wait for the confirmation by indicator moving above the zero mark. As this will be a buy signal in a bearish territory and this type of signal is more likely to be a gold whipsaw.

Sell Signal

When the ++Balance--of--PowerBOP crosses below zero a sell signal is given.

Also when the BOP is declining, the market is in a downwards trend, some traders use this as a sell signal but it is best to wait for a confirmation by moving below zero mark because this will be a sell signal in bullish territory & this type of signal is more likely to be a gold whipsaw.

Sell & Buy Signals

Divergence Trading

In gold trading, divergences between the BOP and price can be used to effectively spotting potential reversal &/or trend continuation points in price movement. There are several types of divergences:

Classic Divergence - Trend reversal signal

Hidden Divergence - Trend continuation

Gold Trading Overbought-Oversold Conditions

This ++Balance--of--PowerBOP can be used to identify potentially overbought and oversold conditions in price movement.

• Overbought-Oversold areas can be used to provide an early signal for potential trend reversals.
• These levels are generated when indicator clusters its tops and bottoms thus setting up the overbought and oversold levels around those values.

However, price might also stay at these overbought & oversold levels and continue heading in that direction for a while & thus it is always good to wait until the BOP crosses over the Zero mark.

From the example shown & described below, even though the ++Balance--of--PowerBOP showed the price was oversold, price continued moving downwards until indicator crossed over to above Zero.

Technical Analysis in Gold Trading