The Bears Power Indicator: Confirming Buy Signals in Trading

Bears Power Index is a momentum oscillator that measures selling pressure in the market. In Tradeworks strategy logic, it is not a standalone entry signal. It works as a confirmation layer after another trend indicator has already created the primary buy or sell context.

Bears Power and Bulls Power are twin indicators designed to work together. While Bears Power measures selling pressure (for buy confirmation), Bulls Power measures buying pressure (for sell confirmation). This bull bear power pairing helps traders compare seller strength and buyer strength before using either oscillator as a confirmation filter in automated rules. Using both gives symmetrical confirmation logic across both trade directions.

How Bears Power Works in Automated Trading

• Twin indicator: Bears Power is commonly used with Bulls Power for symmetrical confirmation logic
• Buy confirmation: Bears Power confirms a buy setup when it is below zero but rising
• Sell confirmation: Bulls Power can confirm the sell side when it is above zero but falling
• Primary signal required: Use a trend indicator such as Moving Average, ADX, or MACD for the main signal first

Bears Power Index is often used together with its twin indicator, Bulls Power Index. It is an oscillator measuring the strength of the sellers in the market. Bears Power Index is calculated as the difference between the low and the exponential moving average for the given period (default setting is 13 periods). The Bears/Bulls Power Index indicators can be tested together with another trend indicator. If the trend indicator creates the buy context, Bears Power can be used as an added filter when it is below zero but rising.

Bears Power Logic in Tradeworks

• Entry Signal Confirmation: Always use Bears Power with another trend indicator such as Moving Average, ADX, or MACD
• Buy Confirmation: Bears Power is less than 0 and is rising
• Sell Confirmation: Bulls Power is greater than 0 and is falling
• Default Period: 13-period EMA difference from low for Bears Power

Combining with Other Indicators

• Trend Filter: Use Moving Average to define market direction before reading Bears Power
• Momentum Context: Use MACD for crossover timing, then Bears Power for confirmation
• Oversold Context: Use Relative Strength Index (RSI) before applying Bears Power as a filter
• Risk Controls: Pair entries with Average True Range (ATR)-based Stop Loss Exit Signal logic

Manageable Beginner Setup

1. Start Simple: Use Moving Average as the primary signal and Bears Power as confirmation only
2. Add Bulls Power: Mirror the confirmation logic for sell-side strategies
3. Add Exits: Include Stop Loss Exit Signal and Take Profit Exit Signal rules before testing entries
4. Avoid JPY pairs: Keep the first test set aligned with the source brief and use non-JPY examples