Measure the strength of buyers and sellers relative to the trend.
Start Automating Free →Want to automate this strategy? Try auto-Trading free — no credit card required.
Overview
The Elder Ray Index, developed by Dr. Alexander Elder and introduced in his landmark book "Trading for a Living" (1993), consists of two separate indicators: Bull Power and Bear Power. Together, they measure how far above or below a 13-period EMA the daily high and low reach — capturing the relative strength of buyers and sellers.
Bull Power = Daily High − 13-period EMA. A positive Bull Power indicates buyers are strong enough to push price above the average; negative Bull Power indicates buyers are unusually weak. Bear Power = Daily Low − 13-period EMA. A negative Bear Power indicates sellers can push price below the average; a positive Bear Power indicates sellers are unusually weak.
Elder's trading rules combine both components with the EMA trend direction: in an uptrend (rising 13-EMA), buy when Bear Power is negative (sellers are active but buyers have structural control) and Bear Power is rising from its lowest recent value (selling pressure is diminishing). In a downtrend (falling 13-EMA), sell when Bull Power is positive but declining.
The genius of Elder Ray is that it identifies the ideal entry point: the brief, temporary weakness within a strong trend where risk is minimised. A slight pullback in Bull Power during an uptrend is exactly where long entries should be considered, not at peaks of bullish momentum.
Strategy Code
This is a TradingView Pine Script example for this indicator. Paste it into the TradingView Pine Editor, add it to your chart, and adjust inputs for your market and timeframe.
//@version=6
strategy("Elder Ray Index (Bull & Bear Power)", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript example for this indicator. Open thinkorswim, create a custom study, paste the script, and apply it to your chart.
input length = 13;
def emaVal = ExpAverage(close, length);
def bullPower = high - emaVal;
def bearPower = low - emaVal;
def buySignal = bullPower > 0 and bearPower > bearPower[1];Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
Explore More
All Strategies & Signals