Balance of Power (BOP) on Gold

What it shows

A jagged line under the candles, pinned between -1 and +1. Every point is one candle’s score on its own, with nothing carried over from the candle before.

How Pravex works it out

1. For each candle take the body: close − open.
2. Take the range: high − low. A candle whose high equals its low has no value.
3. BOP = (close − open) ÷ (high − low).
4. For illustration only: open 100, high 110, low 98, close 108 gives (108 − 100) ÷ (110 − 98) = 8 ÷ 12 = +0.67.
5. There are no settings. Nothing is averaged, so every candle stands on its own.

Settings

Setting	Default	What changing it does

How traders read it

A run of readings above zero says buyers kept closing candles above their open. A run below zero says the opposite. One candle tells you little, so look at the stretch.

A score close to +1 or -1 is a candle that was nearly all body, with hardly any wick. Three or four of those in a row on gold show one side pushing.

The line is jumpy because it is not smoothed. If you want the trend of the balance, judge it over the last several candles rather than one.

Zero is the only guide that matters: it is the candle that closed where it opened.

When it misleads

The value ignores the previous candle, so a big gap between candles does not show up: a candle can open far above the prior close and still score as weak. A doji, with a tiny body in a wide range, scores near zero whether the range was calm or wild. On quiet gold hours, small candles with tiny ranges can still produce readings near +1 or -1, so a high reading on a tiny candle says less than the same reading on a wide one. The jump from Friday’s close to Monday’s open falls between two candles, so BOP never scores it.

Questions and answers

Why does BOP hit +1 on a tiny candle?

It divides the body by the range, so size drops out. A two-cent candle that opens at its low and closes at its high scores +1, the same as a twenty-dollar one.

Is Balance of Power smoothed?

Not in this app. It draws the raw value of each candle, which is why the line moves up and down so sharply.

What is the difference between Balance of Power and Bull Bear Power?

Balance of Power compares a candle’s body with its own range. Bull Bear Power compares the high and low with a moving average of the close.

Why is there a gap in the line?

A candle whose high equals its low has no range to divide by, so it gets no value.

Related: Bull Bear Power, Advance/Decline Ratio (Bars), Relative Vigor Index, every indicator.