The indicator was developed by Daniel Fernandez in 2011 and it was described in the magazine Currency Trader. The indicator is revised version of the Alexander Elder’s Elder-Ray indicator, which is based on the power strength of bears and bulls, as well as the 13-day EMA.
Total Power = Abs (BearCount - BullCount)*100 / Lookback Period;
BearPower = BearCount*100/ Lookback Period;
BullPower = BullCount*100/Lookback Period.
The Elder-ray index was developed to determine trends; the idea of bulls and bears pressure was basic for the index.
The method used in the Elder-ray index is based on three technical indicators, which show the way bullish and bearish price fluctuations are formed according to consensus price. The index includes the 13-day EMA and two Alexander Elder’s indicators - Bull and Bear Power.
The drawback of this approach is the following one it does not make clear signals on market entrance amid absence of global outlook for price movements.
The Total Power Indicator (TPI) for metatrader was developed to provide particular outlook for the market price changes, as well as the difference between current prices and the previous ones.
There are several methods to use this technical indicator:
- if the level of 100 is reached by levels of Bull (or Bear in terms of sell) and Total and if it is so, then open buys (sells in case the line is Bear);
- if Bear and Bull lines are crossing, i.e. if Bull line crosses Bear line from the bottom upwards, then buy, if Bear line intersects Bull line from top downward, then sell;
- if Bull/Bear lines are crossing with indicator lines, i.e. if the line Bull/Bear intersects the level of 50, then one may open buy/sell.
Parameters of InstaForex TotalPower Indicator
LookbackPeriod = 45
PowerPeriod = 10