Balance of Power: Measuring Buying and Selling Pressure with Price Bars

Summary

The Balance of Power (BoP) indicator is presented as a way to compare buyers’ and sellers’ ability to move price. Its basic form divides the close-to-open change by the high-to-low range; the document also describes a variant that uses the prior close as the reference and scales the result as a percentage. A linear regression of this series is plotted as a smoothed companion line, while histogram colors distinguish positive from negative readings.

The document suggests using BoP to assess trend direction, look for divergences that may precede continuation or reversal, and identify potentially overbought or oversold conditions. It includes an implementation converted from a TradingView script, but supplies no empirical results, parameter evaluation, or rules for turning readings into trades. The indicator’s interpretation therefore remains discretionary, and the document does not establish that any of its proposed uses are profitable. The displayed calculation variants should also be distinguished when reproducing or comparing implementations.

Key ideas

• BoP compares the close-to-open move with the bar’s high-to-low range.
• A positive reading indicates the close gained relative to the reference price, while a negative reading indicates a loss.
• The described implementation adds a regression-smoothed line and colors the histogram by sign.
• Price and indicator divergences may be used to investigate possible trend changes or continuation.
• The document gives no tested trading rules or performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.