What Is the Elder Ray Index and What Bitcoin's 5.5% Bear Power Reading Means

The Elder Ray Index splits each bar into Bull Power and Bear Power around a 13-day exponential moving average, and on 22 September 2026 Bitcoin's Bear Power read +4,420.9. That positive number means even the day's low of 85,079.0 sat 5.48% above the average, so sellers never dragged the Phemex BTC perpetual back to value.

The control decides what that reading is worth. Across 35 Phemex USDT perpetuals, the common one-bar version of Elder's buy setup returned a 5-day median of -0.99% on 3,266 signals. Ordinary uptrend days without the setup returned -1.07% on 10,904. A rotation test put the gap at p 0.78 to 0.81, a null result.

Elder Ray Index at a Glance

How the Elder Ray Index Formula Works

Dr Alexander Elder built the indicator on one idea, that a 13-day EMA marks the market's consensus of value. Each bar's extremes then show how far either side could drag price away from it. Our Academy guide to the exponential moving average covers the average itself, and the Elder Ray Index formula adds two subtractions on top of it.

Bull Power is the day's high minus the 13-day EMA, and Bear Power is the day's low minus the same average. Both run in price units, so on Bitcoin they read in dollars and on a ten-cent token they read in fractions of a cent. That is why I quote Bitcoin's figure two ways, as a raw number and as a share of the EMA. The 5.5% in the headline is Bear Power divided by the average.

Elder read the pair as a tug of war over value. When buyers run the tape, the high climbs well clear of the average and Bull Power grows. When sellers take over, Bear Power sinks further below zero. A Bear Power line that stays negative but shrinks bar after bar tells you the selling is running out of force.

What Bitcoin's 5.5% Bear Power Reading Means

A positive Bear Power reading looks bearish at first glance and it means the opposite. Bear Power climbs above zero only when the day's low clears the 13-day EMA, so on 22 September even Bitcoin's lowest trade of the day sat above the average.

The perpetual closed the 22 September bar at 86,158.7 after a high of 86,665.5 and a low of 85,079.0. The EMA rose from 79,741.3 to 80,658.1 on that bar, seeded with the mean of the first 13 closes from 28 December 2023 and a smoothing factor of 2/14. Subtract and you get Bull Power of +6,007.4 and Bear Power of +4,420.9, with the low 5.48% above the average. Bear Power has printed above zero on four straight bars from 19 to 22 September. The 18 September bar still had its low at 76,250.0 against an EMA of 77,668.6.

That's a rare reading on a long file. Across the 987 daily bars from 10 January 2024 to 22 September 2026, Bear Power finished above zero on 342. A low at least 5.48% above the EMA showed up on only 34 of them. Seven of those 34 came in a row from 21 to 27 August 2026. Bitcoin's close then fell 3.50% over the next five bars, to 77,400.2 on 1 September.

Bull Power tells the other half of the story. It fell from +7,613.2 on 21 September to +6,007.4 on the anchor bar while the EMA kept rising, so buyers pushed less far above value than the bar before. Elder's sell rule needs a falling EMA, and the average was still up 916.8 on 22 September. So the dip in Bull Power is a watch item for a Bitcoin momentum trading plan, with no sell signal on the chart.

How Do Bull Power and Bear Power Work in Elder's Rules?

Elder's rules for the Elder Ray trading strategy start with a filter. You trade only in the direction the 13-day EMA slopes. With the average rising you go long when Bear Power is below zero and a bullish divergence has formed. That divergence means price makes a lower low while Bear Power makes a higher one. With the average falling you go short when Bull Power is above zero with a bearish divergence. Our guide to bullish divergence and bottom signals covers the price side of that setup.

Incredible Charts notes the indicator often runs as part of Elder's Triple Screen system and points to his book Trading for a Living for the full rules. It adds a pyramiding rule too, adding to a long each time Bear Power dips below zero and rises back into positive.

Elder built a second oscillator on the same 13-day habit, the Elder Force Index, which multiplies each day's price change by its volume.

Does the Elder Ray Trading Strategy Beat Its Control?

A divergence is a judgment call that no two traders draw the same way, so the test uses a mechanical one-bar version of Elder's buy. The setup fires on a bar where the EMA is rising and Bear Power is below zero but higher than on the bar before. The return runs from that close to the close five bars later.

Protocol: the population is the 35 Phemex USDT perpetuals with at least 365 daily bars since their listing time, with PAXG left out. Each market is measured on up to 1,000 daily bars ending 22 September 2026. Buy setups (3,266) are compared with every other rising-EMA bar (10,904) on the 5-bar forward return. Significance comes from rotating each market's setup labels by a random offset, which keeps the way signals bunch together in time. The test ran 1,000 draws on each of five seeds, 11 through 55 in steps of 11, and reports a two-sided p. The script is elder2.py, run as python elder2.py 5 on Phemex daily bars to the 22 September close.

The result is a null. The setup's median 5-day return was -0.99% against -1.07% for the control, a gap of 0.08 points. The rotation test put p between 0.78 and 0.81 across the five seeds. The win rate told the same story at 45.4% against 44.6%. On means the setup did worse, at 0.11% against 0.81% with p between 0.08 and 0.10. That still misses the usual 0.05 bar, and it points the wrong way for a buy signal.

A plain shuffle of the labels one bar at a time makes the mean gap look far stronger, and that figure stays off this page on purpose. Neighbouring 5-bar windows overlap and setups cluster inside pullbacks, so a one-by-one shuffle treats 3,266 signals as independent events when they share most of their price path.

Bitcoin on its own leaned the same way on means, with 94 setups averaging +0.46% over five bars against +0.66% for its other rising-EMA bars.

What the Elder Ray Indicator Is Good For

Read as a bear power indicator, the Elder Ray indicator gives you a clean picture of who controlled a bar's extremes against value. A strong uptrend keeps Bear Power above zero for days at a time. The first bar whose low reaches back under the EMA tells you sellers have found the average again.

Timing is where it falls short. The test above says a pullback into the EMA inside an uptrend was no better a place to buy than any other rising-EMA day on these 35 markets. So the setup needs a second reason from outside the indicator before it earns a position.

The Balance of Power indicator scores the same tug of war from where each bar closed against its open and its range, and it pairs well with Elder's high-and-low version.

Bottom Line

The Elder Ray Index is a good ruler and a poor trigger. Bitcoin's Bear Power of +4,420.9 on 22 September says buyers held every trade of that bar above value. A 35-market test says the textbook dip-buy inside a rising trend earned nothing its control didn't.

So use the reading to know who owns the bar, and wait for the first low that slips back under a rising EMA before thinking about Elder's buy. The evidence says that setup needs a divergence you can defend or a second reason, because on its own it has matched an ordinary uptrend day and nothing more.

Disclaimer: This article is for informational purposes only and is not financial advice. Cryptocurrency trading involves substantial risk. Always do your own research before making investment decisions.