What it is
The 13 period EMA stands in for fair value: the price most people agree on. The high of a candle shows how far buyers could push above that, and the low shows how far sellers could push below it. Elder Ray puts both distances in one pane.
It is a pullback tool rather than a stand-alone signal. The trend comes from the slope of the EMA; Elder Ray shows when the losing side is running out of strength.
How it is calculated
1. Work out a 13 period EMA of the close. 2. Bull power = this candle's high minus the EMA. 3. Bear power = this candle's low minus the EMA. 4. Both are shown in price points, usually as histograms around 0.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| Length | 13 | 2 to 200 | The EMA used as fair value. 13 is Elder's choice; longer settings make both power readings bigger and slower to change. |
How to read it
How to trade it
- 1
Confirm the trend: the 13 EMA on a 1 hour US30 chart is rising.
- 2
Wait for a pullback that takes bear power below 0.
- 3
Enter long when bear power rises for a candle while still below 0, on a closed candle.
- 4
Stop below the pullback low, for example 40 to 70 points on 1 hour US30.
- 5
Target the last swing high or 2 times the stop, and watch for bull power making lower highs as the move ages.
The long idea is cancelled if the 13 EMA turns down, or if price closes below the pullback low.
WickSpeak writes a plain-English reading of Elder Ray on the live candle: what it measures, whether buyers or sellers are winning against fair value right now, how to trade it and what would prove it wrong. In Playbook, a condition can check when Elder Ray crosses above or below zero, stays above or below zero, or is rising or falling.
Best markets and timeframes
Works on 15 minute to daily charts of indices, gold and forex. It is strongest in trending markets with clean pullbacks; in a tight range both readings hover around 0 and say little.
Common mistakes
- Ignoring the EMA slope. Elder Ray signals only make sense in the direction of the trend.
- Buying just because bull power is above 0. That is normal in an uptrend and gives no timing.
- Comparing raw values across markets. Readings are in points, so gold and US30 have very different scales.
Works well with
Questions traders ask
What is bull power and bear power?
Bull power is the candle high minus a 13 period EMA, showing how far buyers lifted price above fair value. Bear power is the candle low minus that EMA, showing how far sellers pushed it below.
What is the best setting for Elder Ray?
Alexander Elder used a 13 period EMA. Most traders keep it, as the method is built around that average acting as fair value.
How do you trade Elder Ray?
In an uptrend, buy when bear power is below 0 but rising. In a downtrend, sell when bull power is above 0 but falling. Always check the EMA slope first.
Is Elder Ray the same as the Elder Impulse system?
No. Both come from Alexander Elder, but the Impulse system colours candles using an EMA and the MACD histogram, while Elder Ray measures the distance of highs and lows from an EMA.