Balance of Power Bitcoin Trading Analysis and Balance of Power Bitcoin Trading Signals

Developed by Igor Livshin

Balance of Power measures the strength of the bulls versus the bears by assessing the ability of each to push btcusd price to extreme levels.

Bitcoin Trading Analysis and Generating Bitcoin Trading Signals

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

The center is marked as the zero line, levels oscillating above or below are used to generate cryptocurrency signals.

Buy - The scale is marked from Zero 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 Bitcoin Trading Signals

Buy

When the BOP crosses above zero a buy cryptocurrency signal is given.

Also when the BOP is rising, the btcusd trading 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 trading whipsaw.

Sell

When the BOP crosses below zero a sell cryptocurrency signal is given.

Also when the BOP is declining, the btcusd trading market is in a downwards 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 trading whipsaw.

Sell and Buy Bitcoin Trading Signals

Divergence Bitcoin Trading

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

Classic Divergence - Bitcoin Trend reversal bitcoin trading signal

Hidden Divergence - Bitcoin Trend continuation

Trading Overbought/Oversold Conditions

This Balance of Power can be used to identify potentially overbought and oversold conditions in btcusd price movement.

• Overbought/Oversold levels can be used to provide an early warning 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, btcusd price may also stay at these overbought and oversold levels and continue moving in that direction for a while and thus it's always good to wait until the BOP crosses over the Zero mark.

From the cryptocurrency trading example illustrated below, even though the Balance of Power showed the btcusd price was oversold, btcusd price continued moving downwards until the indicator crossed over to above Zero.

Technical Analysis