The Bulls Power indicator is a technical analysis tool used by forex traders to gauge market sentiment and identify potential entry and exit points for trades. This oscillator style indicator focuses specifically on bullish market strength and can be a useful addition for traders using technical analysis strategies.

What is the Bulls Power Indicator?

The Bulls Power indicator, also sometimes referred to as Bull Power or Bulls Strength, belongs to the class of technical indicators known as oscillators. It aims to help traders analyze market sentiment and momentum to find trading opportunities aligned with overall bullishness in the market.

Specifically, the Bulls Power indicator formula works by comparing the current high to the previous period’s high. The difference between the current high and previous high is then divided by the amplitude (high minus low) of the previous period.

The resulting value oscillates above and below zero. Values above zero indicate bullish strength, while values below zero signal bearish momentum.

Bulls Power Formula:

Bulls Power = (Current High – Previous High) / (Previous High – Previous Low)

The indicator values range from -1 to 1. The overbought level is typically set around 0.7, while the oversold level is around -0.3.

Traders often use the Bulls Power in combination with other technical indicators like support and resistance levels, moving averages, and chart patterns to refine entry and exit signals.

What Does the Bulls Power Indicator Tell You?

bulls power chart

The main signals provided by the Bulls Power indicator that traders look for are:

  • Above Zero Readings – Values above the zero line indicate bullish momentum and strength. The higher the reading, the stronger the bullish sentiment. Readings above 0.7 are considered overbought.
  • Below Zero Readings – Values below the zero line signal bearish momentum and weakening bull strength. Readings below -0.3 are considered oversold.
  • Crossovers – Bullish crossovers occur when the indicator line crosses from below zero up above the zero line. This signals shifting momentum from bearish to bullish. Bearish crossovers occur when the indicator moves from above zero down below the zero line, showing bullish strength is fading.
  • Divergences – Divergences form when the indicator reading diverges from the overall price action. For example, the price is making new highs while the Bulls Power indicator fails to reach new highs. This divergence between price and indicator often signals a trend reversal.
  • Peaks and Troughs – Peaks above 0.7 indicate overbought conditions signaling potential trend weaknesses. Troughs below -0.3 indicate oversold readings and possible upcoming shifts in bullish strength.

How to Use the Bulls Power Indicator

bulls power settings

The Bulls Power indicator can be used in a variety of ways to complement other forms of technical analysis. Here are some of the most common applications:

  • Identify Trend Strength – Readings above zero align with uptrends showing bullish strength. Sustained high readings above 0.7 may indicate an overbought market. Low negative readings signal downtrends and weak bull strength.
  • Spot Trend Reversals – Look for crossovers, bearish and bullish divergences, and peaks or troughs to anticipate potential trend reversals.
  • Confirm Entry and Exit Signals – Use Bulls Power to verify potential entries for long trades during uptrends, oversold bounces, or bullish reversals. Look for readings below zero or crossover sell signals to exit longs.
  • Gauge Pullbacks – Monitor Bulls Power during retracements and pullbacks. Strong readings suggest the uptrend will resume, while weakening bull power could signal a trend reversal.
  • Analyze Momentum – Analyze the slope of the indicator. Upward sloping indicator lines show building bullish momentum. Downward slopes signal fading bull strength and bearish momentum acceleration.

Bulls Power vs. Other Oscillators

The Bulls Power indicator provides similar signals to other popular oscillators with a few key differences:

  • Relative Strength Index (RSI) – Both oscillate between 0 and 100 levels. But RSI focuses on overbought and oversold levels while Bulls Power analyzes bull market strength specifically.
  • Stochastics – Stochastics measure bullish and bearish momentum versus the recent price range. Bulls Power compares the current high to the previous high for a direct look at bull strength.
  • Moving Average Convergence Divergence (MACD) – MACD also uses a crossover system but utilizes two moving averages rather than comparing highs like Bulls Power.

Bulls Power compliments these oscillators by providing an additional perspective on bullish momentum. Combining Bulls Power with RSI, Stochastics, or MACD can help confirm signals.

Bulls Power Trading Strategy

Bulls Power can be incorporated into many trading strategies, especially for trend and momentum traders. Here is an example bullish momentum trading strategy using the Bulls Power:

  1. Identify a currency pair in a strong uptrend on the daily chart, with the price above the 200-day moving average.
  2. Add the Bulls Power indicator and look for sustained readings above zero aligned with the uptrend.
  3. Watch for temporary retracements where Bulls Power dips below zero then crosses back above with an upward slope.
  4. Enter long positions when Bulls Power crosses back above zero after retracements. Place stop-loss orders below recent swing lows.
  5. Target taking partial profits at key resistance levels. Move stop-loss to breakeven once price hits 2x risk. Trail stops to lock in profits as the trend continues.
  6. Watch for peak readings above 0.7 signaling overbought conditions. Consider exiting longs when divergence occurs.

Bulls Power Day Trading Strategies

The Bulls Power indicator can also be useful for shorter-term day trading. Here are some day trading approaches:

  • Fading Move – Look for steep bullish price moves with Bulls Power above 0.7. Enter short-term counter-trend sells targeting the 20-period moving average.
  • Support Bounces – Watch for Bulls Power to reach oversold levels below -0.3 at support. Trade bullish bounces targeting previous resistance levels.
  • Range Trading – Identify currency pairs trading in range bound conditions. Use Bulls Power to confirm upper and lower range boundaries. Sell near overbought peaks and buy around oversold troughs.
  • Momentum Bursts – Trade pullbacks during strong trends. Enter on bullish crossovers after Bulls Power reaches oversold levels. Ride momentum targeting new highs.

Optimizing the Bulls Power Indicator

When adding the Bulls Power indicator to your forex trading charts, consider these optimization tips:

  • Time Frames – More reliable signals form on longer time frames like the daily or weekly charts. The 1-hour or 4-hour charts can be used for intraday setups.
  • Indicator Settings – The default 14-period lookback works well for most currency pairs. Increase the setting to smooth the indicator for less sensitivity. Or decrease the setting for a more responsive oscillator.
  • Overbought/Oversold Levels – Adjust the overbought and oversold levels if needed. For example, raise overbought to 0.75 for less sensitive signals. Or lower oversold toward -0.2 for earlier warnings.
  • Divergence Sensitivity – Be cautious with divergences which can occur frequently. Focus only on major divergences with substantial separation between the indicator and price.
  • Confirmation – Use other indicators like trendlines, moving averages, candlestick patterns, or volume indicators to confirm Bulls Power signals. Divergences in particular require confirmation.

Trading with Bulls Power: Final Tips

A few final tips for effectively trading with the Bulls Power oscillator:

  • Respect the broader trend or range conditions on higher time frames. Use Bulls Power for confirmation rather than pure signal generation.
  • Focus on high probability setups and strong indicator readings rather than mediocre signals. Quality over quantity.
  • Be wary of choppy market conditions which can result in false signals and whipsaws. Validate signals with other indicators.
  • Use Bulls Power mainly to confirm entries in the direction of the trend, not counter-trend trades which have lower probability.

The Bulls Power indicator is a valuable addition for forex traders looking to gauge bullish momentum and trend strength. Integrate it as a confirming factor for high probability setups.


The Bulls Power indicator offers forex traders a specialized technical analysis oscillator to measure bullish market momentum and sentiment. Values above zero signal uptrend strength, while readings below zero indicate fading bull momentum and emerging bear strength.

Traders use Bulls Power crossovers, divergences, overbought/oversold readings, and slope analysis to identify potential trade entries and exits aligned with bullish price moves. The indicator can help confirm trend direction, time entries, spot reversals, and analyze momentum.

Bulls Power works best when combined with other forms of technical analysis for high probability setups. Use it to verify trade signals on key time frames like the daily or weekly charts. Consider optimizing the indicator settings and combining Bulls Power with chart patterns, support/resistance, moving averages, and other oscillators.

With the right trading approach, the Bulls Power indicator can provide helpful insights into current market dynamics from a bullish perspective. Adding it to an overall trading strategy can give traders an edge in determining high probability bullish trade entries and exits.