Balance of Power Silver Analysis & Balance of Power Trading Signals

Developed by Igor Livshin

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

Silver Trading Analysis & How to Generate Trade Signals

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

The center is marked as a zero line, areas oscillating above or below are used to generate 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 Trading Signals

Buy Signal

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

Also when the BOP is rising, the trading market is in an upward trend, some traders use this as a buy signal but it's best to wait for the confirmation by moving above the zero mark. As this will be a buy signal in bearish territory & this type of signal is more likely to be a silver whipsaw.

Sell Signal

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

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

Sell & Buy Trading Signals

Divergence Silver Trading

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

Classic Divergence - Silver Trend reversal signal

Hidden Divergence - Silver Trend continuation

XAGUSD Trading Overbought and Oversold Conditions

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

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

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

From the trading example explained and shown below, even though the Balance of Power showed the price was oversold, xagusd price continued moving downwards until the indicator crossed over to above Zero.

Technical Analysis in XAGUSD Trading