Elder Ray: separating buying power from selling power

What it measures

Elder Ray measures how far the high sits above a moving average and how far the low sits below it, plotting the two as separate histograms.

Elder called these bull power and bear power. They answer a different question from a momentum oscillator: not how fast price is moving, but how far each side managed to push during the bar.

Reading them separately is the point. A market where both are large is contested; one where bull power is large and bear power near zero is one-sided.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Compute an exponential moving average of the close, conventionally thirteen periods.

2. 2

   Bull power is the bar high minus that average.

3. 3

   Bear power is the bar low minus that average.

4. 4

   Plot both as histograms around zero.

Settings

A thirteen-period exponential average is the Elder default. A longer one makes both histograms larger and slower without changing what they mean.

How to read it

• Bear power negative but rising during an uptrend is the classic buy setup — sellers are losing ground.
• Bull power positive but falling during a downtrend is the mirror.
• Bull power below zero in an uptrend means buyers could not even push the high above the average, which is a warning.
• The absolute sizes are instrument-specific and only comparable against the same chart history.
• Elder intended it as the second screen of a three-screen system: the trend is established on a higher timeframe, Elder Ray finds the pullback within it, and the entry is triggered separately. Read on its own, without a trend already established elsewhere, it produces signals in both directions at once.

Where it misleads

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