Balance of Power (BoP)
The Balance of Power (BOP) is an oscillator that assesses who currently has more control over the market — buyers or sellers. It analyzes price changes within a candle, showing which side was able to push the price to extremes.
How the Balance of Power Works
Section titled “How the Balance of Power Works”The indicator values range from -1 to +1:
- BOP > 0 — buyers dominate (signal of an increase, possible long entry).
- BOP < 0 — sellers dominate (signal of a decrease, possible short entry).
- Crossing level 0 — indicates a trend change.
How to apply in trading
Section titled “How to apply in trading”- If Balance of Power > 0, this may serve as a signal:
- to open a long deal,
- to close a short deal.
- If Balance of Power < 0, this may serve as a signal:
- to open a short deal,
- to close a long deal.
💡 The indicator is often used to confirm signals from other technical analysis tools (for example, RSI or MACD). It helps avoid false entries and better identify real reversals.
Limitations
Section titled “Limitations”- Like most oscillators, BOP works best in sideways or calm markets.
- During a strong trend, the indicator can “hang” above or below 0 for long periods, not providing clear signals.
- For reliability, it is recommended to combine BOP with trend indicators.
Summary
Section titled “Summary”The Balance of Power indicator provides a direct view of buyer/seller dominance within individual candles. While it generates unreliable signals during strong trends, it works effectively as a confirmation filter alongside trend indicators like MACD or Moving Averages in Veles bots.