Business, Legal & Accounting Glossary
The Elder-Ray Index is a technical indicator developed by Alexander Elder. It measures the amount of buying and selling pressure in the market. The Elder-Ray Index consists of two separate indicators known as “bull power” and “bear power”. These figures allow a trader to determine the position of the price relative to a certain exponential moving average (EMA).
Bull Power = Daily High – n-period EMA
Bear Power = Daily Low – n-period EMA
Bull Power is used to measure the potential for the price to increase above the moving average, while Bear Power is used to measure the potential for the price to decrease below the moving average. Long positions are taken when the Bear Power is below zero and there is a bullish divergence while short positions are assumed when the Bull Power is above zero and there is a bearish divergence.
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This glossary post was last updated: 25th March, 2020 | 6 Views.