Trading-Talk - Technical Analysis

Technical Analysis - Elder Ray Index

Written by Administrator
Saturday, 11 November 2006
The Elder-ray indicator attempts to quantify the buying and selling pressures in any given market. This indicator actually comes in two parts known as "bull power" and "bear power". The Elder-ray Index was developed by Dr Alexander Elder and uses a 13-day exponential moving average (EMA) to show the general market consensus of value. Bull Power refers to the ability of buyers to push prices higher than the consensus of value. Bear Power displays the ability of sellers to send prices below the consensus of value. Bull Power = Daily High - 13-day EMA Bear Power = Daily Low - 13-day EMA Follow these directions if you want to trade using the Elder-ray Index as part of your technical analysis: Only ever trade with the trend indicated by the 13-day EMA Go long if Bear Power is less than zero and there is a bullish divergence of the Bull Power Go short if the Bull Power is positive and there is a bearish divergence on the Bear Power
Last Updated ( Thursday, 20 March 2008 )

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