Elder Ray Index (Bull/Bear Power)

Overview

The Elder Ray Index, developed by Dr. Alexander Elder, measures the amount of buying and selling pressure in a market through two components: Bull Power and Bear Power. Part of the Triple Screen trading system, this indicator uses the metaphor of x-rays to look beneath the surface of price action. Elder recognized that the high of each bar represents the maximum power of bulls to push prices up, while the low represents the maximum power of bears to push prices down. By comparing these extremes to a 13-period EMA, Elder Ray quantifies the relative strength of buyers versus sellers.

The calculation is elegantly simple: Bull Power equals the high minus the 13-period EMA, measuring buyers' capacity to drive prices above the average consensus of value. Bear Power equals the low minus the EMA, measuring sellers' ability to push prices below this average. These values are plotted as histograms beneath the price chart, with Bull Power typically positive in uptrends and Bear Power typically negative. When Bear Power turns positive, it indicates bulls have taken complete control; when Bull Power turns negative, bears dominate. This direct measurement of market forces provides clear insights into trend strength and potential reversals.

Interpretation & Trading Signals

Example Usage

Code examples will be available once the Rust implementation is complete.