Balance of Power: A Body-to-Range Ratio
The balance of power indicator takes the close minus the open and divides it by the bar's high minus its low, then smooths the series. It measures how much of each bar's range the body covers, so it is a candlestick reading in numerical form, not a view of order flow.
Covered on this page: TradingView.
How it works
The indicator claims to answer who won each bar. It reads where price opened, where it closed and how far it traveled between, then returns one number.
The arithmetic is close minus open, divided by high minus low. The numerator is the gap between the prices that book-end the bar; the denominator is everything price covered.
The numerator can never exceed the denominator, so the output is bounded. Plus one means the bar opened at its low and closed at its high; minus one is the mirror image. Real bars sit between.
That ratio describes the candle body as a share of the bar. A tall body with short wicks reads high; a small body between long wicks reads near zero. It is a candlestick reading expressed as a number.
What the ratio actually measures
Most bars leave some wick at both ends, so the body covers only part of the range. A full reading needs a bar that opened at one extreme and closed at the other, which is rare, so readings cluster mid-scale and true extremes are uncommon.
Bar to bar, that ratio jumps far too much to read. Every published version applies a moving average to it. Smoothing buys legibility, pays in lag, and adds a length parameter you must justify.
The zero line is the only level with an unarguable meaning. Above it the smoothed bars closed up on their opens, below it they closed down. Every other threshold is a convention somebody chose.
Nothing in the formula touches participation. Two bars of identical shape read the same whether one traded thinly and the other heavily, so volume must sit on the chart separately.
In practice
The timeframe decides what a reading represents. On a daily chart each value compresses a whole session; on a five-minute chart, five minutes. Not one measurement.
A gap breaks the assumption the formula rests on. When the open sits far from the prior close, the body measures a jump made while the market was shut. That reading is not comparable with its neighbors.
A proportion cannot tell you where to place a stop. The output has no units, so it says nothing about distance in price. Sizing comes from the range, not the ratio built from it.
Every crossing you act on is paid for before it can be right. Take a hypothetical $20 stock quoted a cent wide: every round trip gives up 0.05% of the position before commission, and an indicator that flips often charges that on every flip, which makes it expensive to obey.
Which leaves the honest use: confirmation. It ranks the quality of a move something else found, and does that adequately. It is not a signal generator.
Reading it honestly
The dispersion matters more than the middle. Some bars are nearly all wick and some close right at an extreme, and the smoothing blends both into one line as if they carried equal weight.
That spread is why one reading tells you little. A value near zero is the ordinary condition of a market that has decided nothing, and it appears constantly. Treating every crossing as an event means trading indecision.
The bounded scale also flattens a real difference. A bar spanning $2 and one spanning 20 cents that each open at the low and close three-quarters of the way up both read 0.75, though the first covered ten times the distance.
So read the ratio next to the range, never alone. Take in the bar’s size first, then ask what share the body covered.
What balance of power is not
- Not a measure of order flow. It reads four prices and never sees a single order.
- Not a volume tool. Participation is absent from the formula entirely.
- Not a signal generator. Zero-line crossings are frequent and mostly meaningless.
- Not a position-sizing input. A unitless proportion cannot set a distance in price.
How this connects
This reads where a bar closed relative to its own range, which puts it in the same family as accumulation distribution and every other close-location tool.
The candle is the input. Open, high, low and close - so it is a numerical restatement of what a candlestick already shows visually.
It is called a momentum indicator but measures something narrower: who finished the bar in control, not how fast price is moving.
Volume analysis is the natural pairing, since a strong close on heavy volume and the same close on nothing are different events the formula cannot tell apart.
And single-bar readings are noise. Day-to-day direction in a broad market is close to a coin flip, so one bar’s close location carries very little on its own.
When it fails
Inside a range the line crosses zero over and over. Alternating up and down closes are what a range is, so the indicator faithfully reports a condition in which its own signals have no edge. That is the most common way it loses money.
- On gap bars. The open no longer reflects a continuous market, so the body measures something else.
- On very small bars. A tiny denominator produces an extreme reading from a move that barely happened.
- After a smoothing change. Lengthening the average removes noise and the timeliness that was the only argument for the tool.
- In a strong trend with deep wicks. Long tails compress the ratio while the trend is intact, so the reading contradicts the chart.
- At the close of a session. Auction and settlement mechanics move the closing print for reasons unrelated to the bar.
- Whenever it is the only input. Confirmation tools fail hardest once promoted to decision tools.
The original data
The long real record available here holds closing prices only, so it cannot feed this formula, which needs the open. What it does show is how weak single-session direction is: of the S&P 500’s trading days from January 1950 to September 2026, 53.1% closed above the prior close and 46.9% did not.
That near-even split is the backdrop every reading sits on. A line hovering just above zero is describing the default rather than an edge, and a decisive bar is the unusual case, so the line mostly drifts around a level carrying no instruction.
The site’s video corpus says something else again. Across 24,971 videos, “balance of power” appears in 1 title from 1 channel at 24 views, against 268 videos and 204 channels for “bollinger” and 151 across 99 for “ichimoku”. So check the bar under the line: measure its range against the recent median, and discard readings from smaller bars.
Related
Candlesticks are the parent of this indicator: the body and wick relationship it measures is what a candlestick chart already draws. Reading bar shape yourself makes the numerical version largely redundant. Start there.
Momentum indicator measures the size of a move rather than its shape, the dimension balance of power discards by dividing. The two answer different questions and disagree often. Side by side they show where the ratio loses information.
Volume analysis supplies the participation figure this formula never touches. A decisive-looking bar on thin trade and the same bar on heavy trade mean different things. If the name appealed to you, this gets closer.
Watch for the habit of reading the candles first and then checking whether this line agrees. If it never tells you something the bar has not already shown, ask what you are really paying attention to. Its genuine use is stopping you from talking yourself into a move on a bar that closed nowhere near its extreme, so keep it small and ignore it whenever the bar is tiny.
— Michael Whitman
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