Elder-Ray: What Bulls Power and Bears Power Actually Calculate

Elder-Ray is two histograms that measure the same thing from opposite ends: how far the bar’s high pushed above a moving average, and how far its low pushed below it. Once you know that, most of the mystique around it disappears.

Elder-Ray (Bulls Power / Bears Power) at a glance

What it is and why it works

Alexander Elder’s idea was that a moving average represents the market’s consensus of value, and that each bar shows you how far buyers and sellers were able to drag price away from that consensus. So he built two numbers. Bulls Power is the bar’s high minus a 13-period exponential moving average. Bears Power is the bar’s low minus the same 13-period EMA. Both are plotted as histograms.

That is the entire calculation, and it explains everything the indicator does. Bulls Power is usually positive, because in most bars the high sits above the average. Bears Power is usually negative, because in most bars the low sits below it. The interesting readings are the exceptions: a bar whose high could not get above the average at all gives a negative Bulls Power, meaning buyers failed even to reach consensus value. A bar whose low never dropped below the average gives a positive Bears Power, meaning sellers could not push price down to value at any point.

It is important to be honest about what this really is. Bulls Power and Bears Power are the distance from a moving average, decomposed into an upper and a lower half. Subtract one from the other and you get the bar’s range. Average them and you get roughly the midpoint’s distance from the EMA, which is very close to what the MACD histogram shows, and closer still to a simple “price minus moving average” oscillator. If you already have a moving average on your chart and can see how far price is from it, Elder-Ray is telling you the same story with more precision about the extremes.

What it genuinely adds over those alternatives is that it uses the high and the low rather than the close. Most oscillators (RSI, MACD, ROC, stochastic in its usual form) are transformations of closing prices. Elder-Ray is one of the few that reads what happened inside the bar. That is the reason to have it, and it is the only reason. If you use it as another close-based momentum line you have thrown away its one distinguishing feature.

How to trade it, step by step

1. Add both, and add the moving average too. In MT5 add Bulls Power and Bears Power from Insert → Indicators → Oscillators, leaving the period at 13. Then put a 13-period EMA on the price chart itself. The histograms are measured from that line, and you will read them far better if you can see the line they refer to.
2. Establish the trend from the EMA before reading either histogram. Elder’s own method uses a higher timeframe for direction and this indicator only for timing. At minimum, check the slope of the 13 EMA. Rising slope means you are looking for long entries and should ignore the short readings entirely; falling slope means the reverse.
3. In an uptrend, wait for Bears Power to turn negative and then start rising. Negative Bears Power in an uptrend means the bar’s low dipped below value: a pullback. The signal Elder described is that dip beginning to shrink while the trend direction is still intact: sellers reached below the average but are achieving less each bar.
4. In a downtrend, mirror it exactly. Wait for Bulls Power to turn positive, the high poking above value, and then begin falling. Buyers got above the average and are getting less far each bar.
5. Treat the rare sign flips as the strongest readings on the indicator. Bulls Power going negative means no part of that bar traded above the average: buyers could not reach value all bar. Bears Power going positive means the opposite. These are much less common than ordinary readings and say considerably more.
6. Use divergence between a histogram and price only at extremes. If price makes a higher high but Bulls Power makes a lower high, the new high was reached with less push above value than the last. As with all divergence, that is information about the quality of the move, not a licence to trade against it.
7. Take the exit from structure, not from the indicator. Elder-Ray has no natural stop or target; it is measured in price units with no bounds. Place the stop beyond the swing that would invalidate your read of structure, and let the histograms tell you when the push is weakening rather than where to get out.
8. Switch it off when the EMA goes flat. When the average is horizontal, both histograms oscillate around zero with no informational content whatsoever, and every reading looks like a signal. This is the single most important filter on the tool.

Size every one of those entries with the position size calculator and check the trade is worth taking with the risk/reward calculator before you commit.

The conditions it needs

A trend with an obviously sloped moving average

The indicator measures distance from a mean, so it only means anything when the mean is going somewhere. In a trending market, a shrinking counter-trend histogram is a genuine observation: the opposing side is reaching less far from value with each attempt. That is a reasonable basis for timing a continuation entry.

Judging pullback quality within a trend you already identified

This is the job Elder designed it for. Not direction, direction comes from the higher timeframe, but the question of whether the current dip is a normal pause or the start of something worse. A pullback where Bears Power reaches nowhere near its previous depth is behaviourally different from one that exceeds it.

Instruments where intrabar range carries real information

Because it uses the high and low rather than the close, Elder-Ray is one of the few oscillators that sees wicks. On instruments that regularly produce long rejection wicks (gold, index CFDs around the open, the yen crosses) that is a meaningful advantage over the close-based oscillators everyone else is running.

As the one non-close-based oscillator on a chart

If you want a second opinion rather than a second copy, this is a defensible choice. RSI, MACD, ROC and the rest are all functions of closing price. Elder-Ray at least reads different data, so when it disagrees with them the disagreement is informative rather than a rounding difference.

When it fails

• In a range, both histograms are pure noise. With a flat EMA, Bulls Power and Bears Power simply trace the highs and lows around a horizontal line. Every bar produces a reading, none of them mean anything, and the indicator gives no warning that its own premise has stopped holding.
• It is close to a repackaged MACD histogram. Distance from a moving average is what the MACD histogram approximates too. Running both and waiting for agreement is waiting for two arrangements of the same subtraction to agree. That is not confluence.
• The sign convention traps people constantly. Bears Power is negative almost all of the time and that is normal, not bearish. Traders who read “negative equals sell” will be short permanently. The information is in the change and in the rare sign flips, not in the sign itself.
• The scale is unbounded and instrument-specific. A Bulls Power reading of 12 means one thing on an index and something entirely different on a currency pair. There is no overbought or oversold level, and any fixed threshold you invent will stop working the moment volatility changes.
• MT5 splits it into two indicators with independent scales. Because Bulls Power and Bears Power occupy separate panes by default, their vertical scales autoscale independently, which makes visual comparison between them misleading. Elder intended them read together on one axis, and getting that requires a custom indicator.
• A single wick distorts it. Because it reads the extreme of the bar, one news spike produces an enormous histogram bar that has nothing to do with sustained pressure. On low-liquidity instruments this happens often enough to matter.

Markets it is most informative on

• Gold (XAU/USD): Long rejection wicks are common, and Elder-Ray is one of the few oscillators that actually reads them.
• GBP/JPY: Strong, persistent trends with deep intrabar excursions: exactly the data this indicator uses.
• US30 (Dow Jones): Clear trend phases during cash hours where shrinking counter-trend pushes are readable.
• NAS100 (Nasdaq): Sharp intraday trends where pullback quality is the whole question.

For different levels of experience

If you are brand new

Start with the picture rather than the formula. Draw a 13-period moving average on your chart. During every bar, price pokes some distance above that line and some distance below it. Bulls Power is the first distance and Bears Power is the second. That is genuinely all they are.

Two things follow, and they save a lot of confusion. Bears Power being negative is completely normal: almost every bar dips below the average at some point. It does not mean sell. And a big Bulls Power reading does not mean buy; it means the bar reached a long way above the average, which in an uptrend is ordinary.

The one thing worth watching as a beginner is the rare case. If Bulls Power goes negative, the entire bar traded below the average, buyers could not get price up to value at any point in the bar. That is unusual and it means something. Everything else on this indicator is background.

If your results are inconsistent

The intermediate failure with Elder-Ray is using it for direction. It has no directional content of its own; it measures distance from an average that you have to decide the meaning of. Elder’s own system was explicitly a three-part structure (trend from the higher timeframe, timing from the oscillator, entry from a stop order) and pulling the oscillator out of that structure removes the part that made it work.

The second thing to fix is chart redundancy. If you have MACD, RSI and Elder-Ray, you have three views of momentum, two of which are computed from closing prices. When they agree it feels like weight of evidence and it is arithmetic. The reason to keep Elder-Ray specifically is that it reads highs and lows, so keep it instead of a close-based oscillator, not alongside three.

Finally, get disciplined about the range filter. Look at the 13 EMA before you look at the histograms. Flat line, close the indicator. That single rule removes the majority of Elder-Ray losses, because in a range the histograms produce a continuous stream of plausible-looking signals with no underlying premise.

If you are experienced

Read structurally, Elder-Ray is a decomposition of the bar’s range relative to an EMA anchor: Bulls Power minus Bears Power is exactly the true range excluding gaps, and their mean is the bar midpoint’s deviation from the EMA. So the pair carries two separable signals, a volatility component and a location component, that most users conflate into one reading. Separating them explicitly is more informative than reading either histogram raw.

The location component is a near duplicate of anything else measuring displacement from a mean, and adds little. The genuinely additive component is the asymmetry: the ratio of upper excursion to lower excursion around the anchor. Persistent asymmetry, highs reaching consistently further above the EMA than lows reach below it, is a cleaner read on which side is initiating than a close-based oscillator can produce, because it survives the case where closes are pinned but intrabar behaviour is one-sided.

Two practical cautions for systematic use. The unbounded price-unit scale requires normalisation by ATR or by the EMA itself before any cross-instrument comparison, and the high/low inputs make the series highly sensitive to single-print outliers, which on retail feeds are a data-quality artefact as often as a market event. Filter those before they reach the histogram rather than after.

Risk management for this strategy

Elder-Ray produces no stop level. It is measured in price units around a moving average, and the moving average moves, so there is no fixed reference to place an order against. Any attempt to derive a stop from the histogram itself will produce something that changes every bar for reasons unrelated to your trade.

Take the stop from structure instead: the swing low that would invalidate the uptrend, or the swing high that would invalidate the downtrend. Then size from that distance. Because the indicator’s best signals appear during pullbacks, the stop is often further away than it would be at a breakout entry, and the position must be smaller to compensate, work it out with the position size calculator rather than reusing a habitual lot size.

One specific hazard. Because Bulls Power and Bears Power read the bar extremes, a single volatile bar produces a histogram reading that looks like a decisive shift. Around scheduled news that reading is a wick, not a change of control, and acting on it with a normal stop distance in abnormal conditions is the most reliable way to lose money with this tool.

Where Market Structure Pro fits

Elder-Ray has one dominant failure mode and it is not subtle: it is meaningless when the market is not trending. In a range, both histograms keep producing readings that look exactly like the ones that work, and the indicator itself cannot tell you the difference.

Market Structure Pro is built around making that distinction explicitly. Its ranging and chop filter exists to say NO TRADE when the market is oscillating rather than trending, which is precisely the state where Elder-Ray should be switched off. Instead of judging the slope of a moving average by eye and deciding what you would like it to mean, you get a single verdict (TRADE, TRANSITION or NO TRADE) with a confidence percentage, an A/B/C grade and a plain-English explanation of what is supporting or limiting it.

It also addresses the wick problem. Elder-Ray reads bar extremes, so a thin-liquidity spike produces a dramatic reading with nothing behind it. MSP is session-aware and spread-aware, so a setup appearing in thin conditions is graded for the conditions it is actually in. And because the state locks on the closed bar and does not repaint, the histogram reading and the verdict you acted on are both still there when you review the trade later.

Frequently asked questions

What do Bulls Power and Bears Power actually measure?

Bulls Power is the current bar's high minus a 13-period exponential moving average, and Bears Power is the same bar's low minus that same average. Together they measure how far buyers pushed price above the market's recent consensus value during the bar, and how far sellers pushed it below.

Is Bears Power being negative a sell signal?

No, and this is the most common misreading. Bears Power is negative on almost every bar, because almost every bar's low dips below the moving average at some point. The information is in whether the negative readings are getting deeper or shallower, and in the rare case where Bears Power turns positive.

Is Elder-Ray included in MetaTrader 5?

The two halves ship separately. Bulls Power and Bears Power are both standard MT5 indicators under Insert, then Indicators, then Oscillators. MT5 does not provide a single combined Elder-Ray pane, so if you want both histograms on one shared scale you need a custom indicator.

What is the best period for Bulls Power and Bears Power?

Thirteen is Elder's original setting and remains the sensible default, because it is the period of the exponential moving average the histograms are measured from. Changing it changes what counts as consensus value, so if you shorten it the histograms become smaller and noisier, and if you lengthen it they grow and lag.

How is Elder-Ray different from MACD?

Both ultimately measure displacement from a moving average, so they tell a similar story. The real difference is the input data: MACD is calculated from closing prices, while Elder-Ray uses each bar's high and low. That makes Elder-Ray one of the few oscillators that reads what happened inside the bar rather than only at its end.

Can Elder-Ray be used on its own?

It was never designed to be. Elder's method takes trend direction from a higher timeframe and uses Elder-Ray only to time an entry in that direction. Used alone it has no directional content, because the meaning of a reading flips entirely depending on whether the underlying moving average is rising, falling or flat.

Why does Elder-Ray give so many false signals?

Almost always because it is being used in a range. The indicator measures distance from a moving average, so when that average is flat both histograms simply trace the highs and lows around a horizontal line and every bar produces a plausible-looking reading. Checking the slope of the average first removes most of the problem.

Does Elder-Ray repaint?

No. Both histograms are calculated from the completed bar's high, low and the exponential moving average of closes, so once a bar closes its values are fixed. The current forming bar will change as its high and low extend, which is normal for any indicator reading live data.

Related reading

• MACD: The other displacement-from-average tool: close-based, and largely overlapping.
• Moving Averages: The reference line Elder-Ray measures everything from.
• Divergence: How to read a shrinking histogram against a new price extreme without over-trusting it.
• Multi-Timeframe Analysis: Elder-Ray only works inside a direction chosen on a higher timeframe.