Balance of Power Indicator Explained

Balance of Power (BOP) is the simplest sentiment formula in the library: (close − open) ÷ (high − low). One number per bar, from −1 to +1, saying who controlled the session — buyers who drove price up from the open, or sellers who beat it down.

How It Works

• (Close − open) / (high − low), usually smoothed with a short average.
• +1: the bar opened at its low and closed at its high — total buyer control.
• The smoothed series oscillates around zero as control shifts.

How to Trade It

Smoothed BOP holding above zero confirms trend health; zero-crosses flag control changes early. Divergence is the sharpest use: price making highs while BOP declines means each new push has less finishing power behind it.

Building It in Setup.Cash

Add Balance of Power in the strategy builder — the length input controls its sensitivity — and use its value in any entry, exit, or filter condition. You can also combine it with other tools in the Indicators Lab or via the AI indicator generator. The Elder Ray Index dissects the same question around an EMA baseline. For the full category overview, see the advanced momentum library guide.

Momentum signals are timing tools — combine them with a trend or regime filter and backtest the exact rules before going live.