Projecting Balance of Power with Multiple EMA Smoothing Periods

Summary

The strategy derives Balance of Power from the close's position within each candle's high-low range, then smooths that measure with EMAs of 3, 6, 9, 12, and 18 periods. It averages the raw measure and its EMAs into a composite line, projects that line using its change over two periods, and enters long or short when the projection crosses zero. The EMAs and shaded bands are presented as visual context for short- and longer-term movement.

The document includes BTC/USDT futures backtest settings spanning about a year, but supplies no performance results. It describes the method as simple and visually interpretable, while acknowledging that historical data cannot guarantee future direction, signals may lag or conflict, and frequent trading can arise. Despite suggesting that stops and targets are unnecessary, it also recommends considering risk controls, trend or volume filters, and tuning EMA weights. No evidence is provided that these proposed additions or the original rules improve returns.

Key ideas

• Balance of Power is calculated from the close relative to the candle's high-low range.
• The method smooths that measure with EMAs at five stated periods and averages them into a composite.
• A two-period change projects the composite line, with zero crossings triggering long or short entries.
• The stated futures backtest settings are not accompanied by performance statistics.
• Lag, conflicting averages, sudden events, and high turnover are limitations to consider.

Tags

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