Balance of Power Metals Analysis & Balance of Power Trading Signals

Developed by Igor Livshin

Balance of Power indicator measures the strength of the bulls versus bears by assessing the ability of each to push metals price to extreme levels.

Balance of Power Technical Metals Indicator - Balance of Power Metals Technical Trading Indicators

Metals Analysis & How to Generate Trading Signals

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

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

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

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

How to Generate Buy & Sell Trading Signals

Buy Signal

When the BOP crosses above zero a buy metals trade signal is given.

Also when the BOP is rising, the metal market is in an upwards trend, some traders use this as a buy metals signal but it's best to wait for the confirmation by moving above the zero mark. As this will be a buy metals signal in bearish territory & this type of trading signal is more likely to be a metals trading whipsaw.

Sell Signal

When the BOP crosses below zero a sell metals trade signal is given.

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

Balance of Power Technical Metal Indicator - Balance of Power Metal Technical Trading Indicators

Sell & Buy Trading Signals

Divergence Metals Trading

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

Classic Divergence - Metals Trend reversal metals trading signal

Hidden Divergence - Metals Trend continuation

Metal Trading Overbought Oversold Conditions

This Balance of Power can be used to identify potentially overbought and oversold conditions in metals price movement.

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

However, metals price may also stay at these over bought and oversold levels & continue moving in that direction for a while and thus it's always good to wait until the BOP crosses over Zero mark.

From the metal trading example illustrated and explained below, even though the Balance of Power showed the metals price was oversold, metals price continued moving downwards until the indicator crossed over to above Zero.