BOP Bitcoin Analysis & Balance of Power Trading Signals

Created by Igor Livshin

BOP indicator measures the strength of the bulls versus the bears by assessing the ability of each to push bitcoin price to extremes zones.

BTCUSD Analysis & How to Generate Trading Signals

When using this indicator, the zero line crossovers are used to generate bitcoin signals.

Center is marked as the zero line, areas oscillating above or below are used to generate bitcoin signals.

Buy - The scale is labeled from 0 to +100 for bullish market movements

Sell - The scale is marked from Zero to -100 for bearish market movements

How to Generate Buy and Sell Signals

Buy Signal

When the Balance of Power crosses above 0 a buy bitcoin signal is given.

Also when the BOP is rising, the btcusd market is in an upwards trend, some traders use this as a buy cryptocurrency signal but it is best to wait for the confirmation by moving above the zero mark. As this will be a buy cryptocurrency signal in bearish territory and this type of signal is more likely to be a bitcoin whip-saw.

Sell Signal

When the Balance of Power crosses below 0 a sell bitcoin signal is given.

Also when the BOP is declining, the btcusd market is in a downward trend, some traders use this as a sell cryptocurrency signal but it is best to wait for a confirmation by moving below the zero mark because this will be a sell cryptocurrency signal in bullish territory and this type of signal is more likely to be a bitcoin whipsaw.

Sell & Buy Signals

Divergence BTCUSD Trading

In bitcoin trading, divergences between the BOP and bitcoin price can be used to effectively identifying potential reversal and/or bitcoin trend continuation points in the bitcoin price movement. There are various types of divergences:

Classic Divergence - Bitcoin Trend reversal bitcoin signal

Hidden Divergence - Bitcoin Trend continuation

Bitcoin Overbought and Oversold Conditions

This BOP can be used to identify potentially overbought and oversold conditions in bitcoin price movement.

• Overbought/Oversold levels can be used to provide an early signal for potential bitcoin trend reversals.
• These levels are generated when the indicator clusters its tops and bottoms thus setting up the overbought and oversold levels around those values.

However, bitcoin price may also stay at these over bought and oversold levels & continue moving in that direction for a while and thus it's always good to wait until the BOP crosses over Zero mark.

From the trading example illustrated below, even though the BOP showed the bitcoin price was oversold, bitcoin price continued moving downwards til the indicator crossed over to above Zero.

Analysis in BTCUSD Trading