> For the complete documentation index, see [llms.txt](https://chartschool.stockcharts.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/balance-of-power-bop.md). # Balance of Power (BOP) ## What Is the Balance of Power? Balance of Power (BOP) is an oscillator that measures the strength of buying and selling pressure. Introduced by Igor Levshin in the August 2001 issue of *Technical Analysis of Stocks & Commodities* magazine, this indicator compares the power of buyers to push prices to higher extremes with the power of sellers to move prices to lower extremes.

When the indicator is in positive territory, the bulls are in charge, and sellers dominate when the indicator is negative. A reading near the zero line indicates a balance between the two and can mean a trend reversal. {% hint style="warning" %} **Note:** This indicator is sometimes referred to as the Balance of Market Power (BMP). {% endhint %} ## Calculating the BOP Livshin's original calculation method for the Balance of Power indicator is fairly complex, but can be reduced to a much simpler formula: ``` BOP = (Close - Open) / (High - Low) ``` Of course, using these raw daily values makes for a choppy oscillator, so the values are typically smoothed with a moving average. Livshin recommends smoothing with a 14-period SMA, but the number of periods can be modified to fit the timeframe being charted. The resulting indicator oscillates between -1 and +1. A positive value indicates a Security that is closing above its open; the higher the value, the more extreme the positive price change. A maximum value of +1 would indicate that the security opened at the low and closed at the high value for every time period included in the moving average. ## Interpreting the BOP The Balance of Power indicator shows the direction and extent of price change during the trading period. Like most oscillators, the Balance of Power indicator can be used to identify trends, divergences from price, and overbought/oversold conditions. Zero-line crossovers provide buying and selling signals. ### Zero-Line Crossovers The scale of this oscillator ranges from -1 to +1, with 0 as the centerline. Zero-line crossovers indicate a move into positive or negative territory, and are often used as buy or sell signals. A cross above the center line generates a buy signal, and a cross below generates a sell signal. The data is smoothed with a moving average in order to reduce the number of whipsaws. An SMA with more periods reduces the number of false crossover signals, but also reduces the responsiveness of the indicator. In the chart below, the BOP of the Technology Select Sector SPDR (XLK) crossed the zero line in early April, just as price gapped up and rose sharply for several weeks. In early June, the uptrend stalled and price consolidated, as the BOP drifted back down toward the centerline.

Note that not every zero-line crossover of the BOP is a good signal. In the chart above, the cross below zero in late June did not lead to a downtrend, nor did the many other crossovers as price consolidated between late June and early September. Chartists should not rely on the crossover alone, but look for volume and other indicators to confirm the signal. ### Trends and Divergences In general, a rising BOP line indicates an upward trend and a falling BOP line indicates a downward trend, with the zero-line crossovers marking the change in trend. But this is not always the case. When price makes new highs but BOP doesn't, that is a negative divergence; when price makes new lows but BOP doesn't, that is a positive divergence. These divergences can foreshadow a change in trend. In the chart below, the price and the BOP of the Consumer Staples Select Sector SPDR (XLP) rose in tandem for most of January. But in late January, the BOP turned downward (red dotted line) as price continued to rise (green dotted line), setting up a negative divergence. After a brief consolidation, price dropped sharply in late February.

### Overbought/Oversold Conditions The Balance of Power indicator can also help chartists look for overbought conditions. If the BOP reaches a higher-than-usual high, that can indicate overbought conditions and the start of a downtrend. Conversely, a lower-than-usual low for BOP can indicate oversold conditions and the start of an uptrend. Chartists will need to look at historical levels for the security they are studying to determine what should be considered overbought/oversold for that security. Once those overbought/oversold levels have been established for that security, then look for dips beyond those levels. In the previous example, XLP rose dramatically in January and its BOP value approached 0.40 at the end of the month. To determine whether that is overbought for XLP, we can look at a longer-term chart. In the XLP chart below, we can see that BOP has only crossed above the 0.40 mark (red horizontal line) three times in the previous five years. XLP was indeed overbought in late January.

## The Bottom Line The Balance of Power (BOP) indicator uses price to measure buying and selling pressure. It determines the strength of the buyers and sellers by looking at how strongly the price has changed, rather than using volume. Zero-line crossovers of the BOP indicator can be used as a signal for trend reversals. In addition, indicator trends, divergences with price, and extreme overbought/oversold levels can give clues about the current price trend and the possibility of a price trend reversal. As with all indicators, traders should use the Balance of Power indicator in conjunction with other indicators and analysis techniques. *** ## Charting with the BOP ### Using with StockChartsACP The Balance of Power indicator can be charted on StockChartsACP after installing our free Advanced Indicator Pack. Please see our [StockChartsACP Plug-Ins article](https://help.stockcharts.com/charts-and-tools/stockchartsacp/stockchartsacp-plug-ins) in the Support Center for more information on installing this plug-in. Once the plug-in is installed, the Balance of Power indicator can be added from the Chart Settings panel for your StockChartsACP chart. The indicator can be positioned above, below, or behind the security's price plot.

[Click here for a live version of this chart.](https://schrts.co/KSTUgMXa) By default, the indicator is smoothed with a 14-period SMA, but the number of periods can be adjusted to meet your technical analysis needs. A horizontal line can also be added to the BOP indicator panel at 0.0, in order to more easily spot zero-line crossovers. ## Scanning for the BOP StockCharts members can search for stocks based on Balance of Power (BOP) values. Below are some example scans that can be used for BOP-based signals. Simply copy the scan text and paste it into the Scan Criteria box in the [Advanced Scan Workbench](https://help.stockcharts.com/scanning-and-alerts/technical-scans/advanced-scan-workbench). Members can also set up alerts to notify them when a BOP-based signal is triggered for a stock. Alerts use the same syntax as scans, so the sample scans below can be used as a starting point for setting up alerts as well. Simply copy the scan text and paste it into the Alert Criteria box in the [Technical Alert Workbench](https://help.stockcharts.com/scanning-and-alerts/technical-alerts/technical-alert-workbench). ### Bullish Zero-Line Crossover This scan reveals stocks where the Balance of Power indicator crosses above zero, which is a bullish sign. This scan is just a starting point. Further refinement and analysis are required. ``` [type = stock] AND [country = US] AND [Daily SMA(20,Daily Volume) > 40000] AND [Daily SMA(60,Daily Close) > 20] AND [BOP(14) x 0] ``` ### Bearish Zero-Line Crossover This scan reveals stocks where the Balance of Power indicator crosses below zero, which is a bearish sign. This scan is just a starting point. Further refinement and analysis are required. ``` [type = stock] AND [country = US] AND [Daily SMA(20,Daily Volume) > 40000] AND [Daily SMA(60,Daily Close) > 20] AND [0 x BOP(14)] ``` {% hint style="info" %} **Learn More:** For more details on the syntax for Balance of Power scans, please see our [Scan Syntax Reference](https://help.stockcharts.com/scanning-and-alerts/scan-writing-resource-center/scan-syntax-reference/scan-syntax-technical-indicators#balance_of_power_bop) in the Support Center. {% endhint %} *** --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://chartschool.stockcharts.com/table-of-contents/technical-indicators-and-overlays/technical-indicators/balance-of-power-bop.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.