A candle closes green and you read it as strength. But look closer: it opened near its low, ran to a high, then sold off and closed only just above where it began. Buyers started the bar and sellers finished it. The color said one thing; the fight inside the candle said another. That gap between a candle’s color and its conviction is exactly what the Balance of Power indicator is built to expose.
By the end of this guide you will be able to tell a decisive candle from a hollow one, spot when price and pressure disagree, and know why this particular reading holds up in markets where volume data cannot be trusted.
Key Findings
- It scores each candle's fight: the indicator compares where price closed against where it opened, scaled by the candle's full high-to-low range, and plots the result around a zero line.
- Side and distance both matter: above zero means buyers won the bar, below means sellers did, and the further from zero, the more one-sided the win.
- Price, not volume: because it reads pressure from the open, high, low, and close alone, it stays reliable in spot forex where broker volume is only a partial feed.
- Its best signal is disagreement: price pushing to a new extreme while the pressure reading fades is an early warning that the move is running thin.
What does the balance of power indicator actually measure?
The Balance of Power indicator measures who controlled a candle by comparing its close to its open, then scaling that against the candle’s full range. If price closed well above where it opened, buyers ran the bar and the reading sits high above zero. If it closed near where it opened, or below, the reading drops toward or under zero.
The scaling is the clever part. A ten-pip gain on a candle that only travelled twelve pips is near-total buyer control. The same ten-pip gain on a candle that swung eighty pips high to low is a much weaker win, because sellers clearly pushed back hard along the way. By dividing the close-minus-open move by the whole high-to-low range, the indicator grades not just who won, but by how much.
Most versions then run a short moving average over that raw score, because a single bar is noisy. The smoothed line is what you actually watch. It was introduced by the trader and developer Igor Livshin in Technical Analysis of Stocks & Commodities magazine in 2001, as a plain gauge of the tug-of-war inside each bar.
How do you read the balance of power line?
Start with the zero line, then read the distance from it. Above zero, buyers closed the bar in charge; below zero, sellers did. A line that spends most of its time above zero during an uptrend is confirming that pushes higher are being defended. A line that keeps slipping under zero while price grinds sideways is a quiet warning that sellers are doing more work than the chart admits.
The height of the reading is your conviction gauge. Pinned near its top edge means candles are closing at or near their highs with little resistance. Hovering around zero means neither side is winning cleanly, which is common in a range and a reason to stand aside.
Balance of power vs volume tools: what is the difference?
Traders often reach for volume to answer the same question, so it is worth being precise about how they part ways. Volume-based tools tell you how much trading happened. The Balance of Power indicator tells you who came out ahead. Those are related, but not the same.
| Factor | Balance of Power | Volume flow tools (OBV, MFI) |
|---|---|---|
| Core input | Open, high, low, close | Traded volume plus price |
| Measures | Conviction inside each bar | How much money changed hands |
| Works without volume? | Yes, price only | No, needs a volume feed |
| Best market | Any, incl. spot forex | Centralised, e.g. futures, stocks |
| Blind spot | Ignores participation size | Broker volume is a partial feed |
That last row is the reason many forex traders prefer a price-only gauge. Spot forex has no central exchange, so the “volume” your platform draws is really just your broker’s slice of activity, not the market’s. A pressure read built from price sidesteps that problem entirely. When you do have trustworthy volume, tools like the Money Flow Index and On-Balance Volume add a dimension this one cannot see. The two approaches complement each other rather than compete.
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Get RelicusRoad ProWhen does the pressure reading warn you early?
The most useful thing this indicator does is disagree with price. When price prints a fresh high but the pressure line makes a lower high, buyers are getting less for their money each push. The move is still going, but the conviction behind it is thinning. That split often shows up a few bars before price actually turns, which is why traders treat it as a heads-up rather than a trigger.
The honest caveat: a fading reading is a reason to tighten a stop or hold off on adding, not a reason to flip short on its own. Momentum can thin out and then rebuild. Divergence marks where a trend is vulnerable, not where it dies. The same discipline applies to any oscillator, and we walk through the trap it sets in the RSI divergence strategy ; the reasoning carries straight over to reading pressure this way.
There is a wider point here about what any oscillator can and cannot do, which the note on leading versus lagging indicators lays out. A pressure gauge leans slightly leading, so it warns early and, like anything that warns early, it cries wolf sometimes. Tools built to read the change in momentum, such as the accelerator oscillator , sit even further out on that leading edge, trading more false alarms for a bigger head start. Others go the opposite way and add context to steady the read: the Traders Dynamic Index pairs its momentum line with a trend baseline so a divergence is judged against direction rather than in isolation.
Does the balance of power indicator repaint?
A correctly built Balance of Power indicator does not repaint its closed bars. Each candle’s open, high, low, and close are locked the moment it prints, so the reading for that bar is set for good. Scroll back a week, reload the chart, and last Tuesday’s reading is exactly where it was. Nothing behind the live edge moves.
The live bar is the one place it recalculates, and that is not a defect. While the current candle is still forming, its close and its range keep changing tick by tick, so the reading climbs, drops, and can cross zero before the bar finishes. A reading you act on three seconds into a candle is measuring an unfinished fight. The fix is the same one that steadies every oscillator: judge the bar at its close, not before. We set out the full test for a moving signal in the non-repaint forex indicator guide , and it applies here without a single change.
Where does a locked, confirmed pressure read fit?
RelicusRoad Pro treats buying and selling pressure the way a disciplined trader does by hand, but it removes the moment of weakness where you act on a bar too early. Instead of leaving you to eyeball whether the current candle has settled, it commits the read at the close and holds it, so what you see is what actually happened, not a number still in motion. That confirmed pressure is then weighed alongside trend and structure, rather than fired as a lone signal, in the same spirit as reading the Force Index inside a wider picture instead of in isolation.
Here is the trade-off worth stating plainly. A clean pressure read tells you whether a candle was won decisively or scraped through. It cannot tell you your idea was right to begin with, and it will not rescue a position sized too large. That judgement stays yours. What the tool takes off your plate is the oldest mistake in reading any oscillator: trusting a number before the candle that draws it has finished.
Frequently asked questions
What is the balance of power indicator? The Balance of Power indicator, sometimes called the BOP oscillator, measures the strength of buyers against sellers within each candle. For every bar it compares the close to the open and divides that by the candle’s high-to-low range, then usually smooths the result with a short moving average. The output swings around a zero line: above zero means buyers finished the bar in control, below zero means sellers did. The trader and developer Igor Livshin introduced it in Technical Analysis of Stocks & Commodities magazine in 2001.
How do you read the balance of power indicator? Read it in two parts. The side of zero tells you who won the bar, buyers above or sellers below. The distance from zero tells you how one-sided that win was: a reading pinned near the top means the candle closed right at its high with almost no push-back, while a reading hovering near zero means the two sides fought to a draw. Most traders watch the smoothed line for a steady lean to one side, and treat a split between price direction and the pressure reading as the more useful signal.
What is the difference between the balance of power indicator and a volume indicator? Volume tools like On-Balance Volume or the Money Flow Index need traded volume to work, and in decentralised spot forex that volume is only your broker’s feed, not the whole market. The Balance of Power indicator uses price geometry alone, the open, high, low, and close, so it gives a consistent read of buying and selling pressure even where reliable volume does not exist. The trade-off is that it measures conviction inside the bar rather than how much money changed hands.
Does the balance of power indicator repaint? A correctly built Balance of Power indicator does not repaint its closed bars. Once a candle prints its final open, high, low, and close, the reading for that bar is fixed and will not change when you reload the chart. The live bar is the honest exception: while the current candle is still forming, its close and range keep moving, so the reading rises, falls, and can cross zero until the candle closes. That is normal recalculation, not repainting, but it means a mid-candle reading is provisional.
Who created the balance of power indicator? The indicator was developed by Igor Livshin, who described it in an article for Technical Analysis of Stocks & Commodities magazine in 2001. His aim was a simple gauge of intrabar conviction, a way to see whether buyers or sellers had the upper hand as each candle formed, using only the price data every chart already carries.
The Balance of Power indicator will not call the turn for you. It tells you who really won each candle and warns you when the winner is tiring, as long as you read the bar once it has closed.