# Elder Ray Index Indicator – Formula | Strategy

Elder Ray index Indicator indicates buying & Selling pressure. It shows Bullish and bearish trend & strength of the trend.

Contents

## Setting

• Elder bull power: the color of the bull bar.
• Elder bear power: the color of the bear bar.

## How Elder Ray index work

This indicator formed the Bull power & Bear power bar. By default bullish strength bar is green & Bearish strength bar is Red.

How Bull power bar formed:

• ERI indicator use 13 Period EMA.13 Period EMA will substrate from the current Period High. If the value is positive then Green Bar will be formed above the ‘0’ level. The substrated value will determine Bar height.
• If the Subtracted value is negative then the green bar will be formed below the ‘0’ level. the substrated value will determined bar height below the ‘zero’ line.
• In a simple word, If candle high point is above the EMA line then bull power( Green bar) will be formed above the ‘0’ line. & when the candle high point is below the EMA line then the bull power candle (Green bar) will form below the zero line. the height of the bar depends on the distance of the high point from the EMA line.

How Bear power bar Formed:

• ERI indicator use 13 Period EMA.13 Period EMA will substrate from the current Period Low. If the value is positive then Red Bar will be formed above the ‘0’ level. The substrated value will determine Bar height.
• If the Subtracted value is negative then the Red bar will be formed below the ‘0’ level. the substrated value will determined bar height below the ‘zero’ line.
• In a simple word, If the candle Low point is above the EMA line then bear power ( Green bar) will be formed above the ‘0’ line. & when the candle Low point is below the EMA line then the bear power candle ( Green bar) will form below the ‘zero’ line. the height of the bear bar depends on the distance of the low point from the EMA line.

## Elder Ray index Calculation

Formula is the Subtraction of specific period EMA value from the current period price.

```Bull power: Current period High - specific period EMA.
Bear Power: Current period Low - specific period EMA.```

## Elder Ray index trading Strategy

• Buying signal generated when, bull power bar formed above the ‘ 0’ Line & and if bear power bar formed above the ‘zero line, this means more strength in a bullish trend. Increasing the height of the bull & Bear bar shows the strength of the trend. Decreasing the height of the bull & Bear bar is the sign of weakness of the trend. If bull power formed below zero line which means bullish trend change to a bearish trend.
• Short sell signal generates when bear power bar formed below the ‘ 0’ Line & and if bull power bar formed below the ‘zero line, this means more strength in the bearish trend. On the negative side Increasing the height of the bear bar & bull bar shows the strength of the negative trend. On the negative side Decreasing the height of the bull & Bear bar is the sign of weakness of the bearish trend. If bear power formed above zero line which means bearish trend change to the bullish trend.
• Decreasing the height of bull bar below zero level is the sign, weakness of a bearish trend. And decreasing the height of the bear bar above the zero level is the sign that weakness of the bullish trend.

## Conclusion

The elder ray index indicates the power of the bullish trend and bearish trend. It uses an exponential moving average to calculate the value of positive trends and negative trends. It differentiates the current period high and low price with 13-period exponential moving averages, & the value will show by the form of bull and bear bars.