Elder-Ray indicator

The elder-ray indicator is a momentum indicator that measures how far from the equilibrium level a share price is. The elder-ray indicator consists of two graphs, BullPower and BearPower.

BullPower is calculated as the highest share price during the day minus a 13-day exponential moving average. BearPower is calculated as the lowest share price during the day minus a 13-day exponential moving average. The elder-ray indicator shows overreactions in the stock price.

Buy signals are given when a rising trend is initiated according to the exponential moving average if the BearPower value is below zero and in a rising trend. Sell signals is given when a downward trend is initiated according to the exponential moving average if the BullPower value is above zero and in a downward trend. BullPower indicates if the stock is overbought and BearPower indicates if the stock is oversold.