Balance of Power (BOP)
The Stealth Detector of Buyer vs Seller Control
Created by Igor Livshin, the Balance of Power (BOP) is a clever oscillator that reveals who's really driving the market – buyers or sellers – by looking at where price closes relative to the day's range, all relative to the open. Unlike volume-heavy tools or plain momentum gauges, BOP zeros in on intrabar strength, spotting hidden accumulation (smart money buying quietly) or distribution (selling under the radar). Smoothed and bounded between roughly +1 and –1, it's the undercover agent for detecting institutional footprints before the crowd notices.
The Core Formula – Intrabar Power Struggle
Raw calculation per bar:
BOP = \frac{(Close - Open)}{(High - Low)} (with safeguards for flat ranges)
Then typically smoothed with a moving average (14-period common) to reduce noise.
- Close near high + wide range = strong buyers.
- Close near low = strong sellers.
- Close middle = balanced fight.
Platforms handle edge cases (zero range) gracefully.
Reading the Oscillator – Who’s Winning
Clear zones:
- +0.5 to +1: Strong buying pressure – bulls dominating.
- 0 to +0.5: Mild accumulation – buyers edging ahead.
- 0 to –0.5: Mild distribution – sellers gaining.
- –0.5 to –1: Strong selling pressure – bears in control.
- Crossing zero: Power shifting – watch for trend change.
Sustained extremes often signal institutional activity.
Strategic Use Cases
Pro applications:
- Trend confirmation: Price rising + BOP positive/strengthening → real bullish move.
- Early reversal: Price new high + BOP weakening/diving → distribution warning.
- Breakout validation: Breakout + BOP surging in direction → higher probability.
- Hidden accumulation: Flat/slight dip price + rising BOP → smart money buying.
Divergences are gold – price and BOP moving opposite = power shift coming.
Parameter Tweaks
Main knob is smoothing period:
- Short (7–10): Responsive – intraday and fast markets.
- Classic (14): Balanced swing timing.
- Long (21–30): Smoother – position trades, filters noise.
Smart Combinations
Pair for power:
- Volume/OBV: BOP extreme + volume confirmation = conviction.
- Trend tools (MA/ADX): Positive BOP in uptrend = stay long.
- Price action: BOP divergence + reversal candle = high-probability setup.
- RSI/MACD: Multi-momentum confirmation.
Strengths and Limitations
The Wins
- Reveals hidden buyer/seller control early.
- Excellent divergence and accumulation/distribution detector.
- Works across timeframes and assets.
- Clean bounded scale.
The Gotchas
- Sensitive to volatility spikes – brief distortions.
- Low-volume or gappy assets can mislead.
- Not standalone – needs trend/volume context.
Your BOP Launch Checklist
- Start with 14-period smoothing.
- Plot zero line and ±0.5 bands.
- Require volume or trend confirmation.
- Watch divergences closely – often early warnings.
- Backtest extreme and zero-cross performance.
- Adjust smoothing for timeframe/volatility.
Key Takeaways
BOP measures intrabar buyer vs seller dominance – who really controls the close.
Positive = accumulation power, negative = distribution pressure.
Shines at spotting hidden institutional moves and divergences.
Great trend confirmer and early reversal detector.
Combine with volume and trend tools – and BOP reveals the true power balance. Stay aware and trade strong!
Balance of Power (BOP)
The Stealth Detector of Buyer vs Seller Control
Created by Igor Livshin, the Balance of Power (BOP) is a clever oscillator that reveals who's really driving the market – buyers or sellers – by looking at where price closes relative to the day's range, all relative to the open. Unlike volume-heavy tools or plain momentum gauges, BOP zeros in on intrabar strength, spotting hidden accumulation (smart money buying quietly) or distribution (selling under the radar). Smoothed and bounded between roughly +1 and –1, it's the undercover agent for detecting institutional footprints before the crowd notices.
Table of Contents
The Core Formula – Intrabar Power Struggle
Raw calculation per bar:
BOP = \frac{(Close - Open)}{(High - Low)} (with safeguards for flat ranges)
Then typically smoothed with a moving average (14-period common) to reduce noise.
- Close near high + wide range = strong buyers.
- Close near low = strong sellers.
- Close middle = balanced fight.
Platforms handle edge cases (zero range) gracefully.
Reading the Oscillator – Who’s Winning
Clear zones:
- +0.5 to +1: Strong buying pressure – bulls dominating.
- 0 to +0.5: Mild accumulation – buyers edging ahead.
- 0 to –0.5: Mild distribution – sellers gaining.
- –0.5 to –1: Strong selling pressure – bears in control.
- Crossing zero: Power shifting – watch for trend change.
Sustained extremes often signal institutional activity.
Strategic Use Cases
Pro applications:
- Trend confirmation: Price rising + BOP positive/strengthening → real bullish move.
- Early reversal: Price new high + BOP weakening/diving → distribution warning.
- Breakout validation: Breakout + BOP surging in direction → higher probability.
- Hidden accumulation: Flat/slight dip price + rising BOP → smart money buying.
Divergences are gold – price and BOP moving opposite = power shift coming.
Parameter Tweaks
Main knob is smoothing period:
- Short (7–10): Responsive – intraday and fast markets.
- Classic (14): Balanced swing timing.
- Long (21–30): Smoother – position trades, filters noise.
Smart Combinations
Pair for power:
- Volume/OBV: BOP extreme + volume confirmation = conviction.
- Trend tools (MA/ADX): Positive BOP in uptrend = stay long.
- Price action: BOP divergence + reversal candle = high-probability setup.
- RSI/MACD: Multi-momentum confirmation.
Strengths and Limitations
The Wins
- Reveals hidden buyer/seller control early.
- Excellent divergence and accumulation/distribution detector.
- Works across timeframes and assets.
- Clean bounded scale.
The Gotchas
- Sensitive to volatility spikes – brief distortions.
- Low-volume or gappy assets can mislead.
- Not standalone – needs trend/volume context.
Your BOP Launch Checklist
- Start with 14-period smoothing.
- Plot zero line and ±0.5 bands.
- Require volume or trend confirmation.
- Watch divergences closely – often early warnings.
- Backtest extreme and zero-cross performance.
- Adjust smoothing for timeframe/volatility.
Key Takeaways
BOP measures intrabar buyer vs seller dominance – who really controls the close.
Positive = accumulation power, negative = distribution pressure.
Shines at spotting hidden institutional moves and divergences.
Great trend confirmer and early reversal detector.
Combine with volume and trend tools – and BOP reveals the true power balance. Stay aware and trade strong!
Related Terms
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