04 Balance of Power (BOP)

BOP evaluates the overall strength of buyers and sellers in the market using as formula:

(Close price – Open price) / (High price – Low price)

A positive BOP indicates buyer market dominance, whereas negative BOP indicates seller market dominance. When BOP is equal to zero, it shows that buyers and sellers are equal in the current market.

BOP is not smooth so, it benefits from passing it by an EMA.

Figure 8.9: Balance of Power