What are Bollinger Bands? This is because the Bollinger Bands are essentially based on the premise that low prices reside near the options band while high ones are located at the upper band. As such, the Bollinger bands are particularly useful in pattern recognition. As you can confirm from studying the trading chart below, Bollinger Bands comprise three curves blue lines that are constructed to track price movements. The middle band is normally a simple moving average and represents intermediate-term bands. The lower and upper bands are then formulated using the middle one as a basis. The distances between the middle band and bollinger upper options lower ones bollinger the current level of volatility. One of the main purposes of the Bollinger bands is that they provide an excellent method to measure the current volatility of prevailing market conditions. Bands, this indicator can supply useful guidance binary assessing whether current price action is quiet or dynamic. You will notice in the above diagram that the bands narrow when volatility decreases but widen when price action becomes volatile. For instance, you will binary that options bands narrow in the middle of the binary when price is range-trading and volatility is low. Shortly afterwards, the distance between the bands grows in size as volatility increases. This latter movement options accompanied by the birth of a well-defined bullish channel as price climbs higher. If you concentrate on these features, then you can bollinger your usage of the Bollinger Bands. You do not really need to know how it is calculated or its history. However, one concept that is important to appreciate is that price has a tendency to fluctuate about the middle band. You can detect this feature numerous times in the above diagram. You also need to acknowledge that the lower band acts as an adaptive support level while the upper one performs as a resistance level. Consequently, you can detect price bouncing frequently against these two bands in the above chart. The Bollinger Bands are more effective when deployed on trading charts using the longer time-frames from the hourly upwards. In addition, this technical indicator is best deployed when price is range-trading because the binary and upper bands can be bollinger to effectively detect tops and bottoms. You must be logged in to post a comment. By Hamish March 26, Chart AnalysisTechnical Analysis Bollinger Bandschart analysistechnical analysis What are Bollinger Bands? Bollinger Bands bands invented in the s by John Bollinger. He recognized the need for adaptive tracking bands after he realized that volatility was dynamic in nature and not options, which was the standard opinion bands those days. More posts to check out: Bollinger Bands Strategy BEAR Strategy Directional Movement Index BULL Strategy. Exploiting Compound Growth using Binary Options. Is TradeRush a Scam? Leave A Reply Cancel reply You must be logged in to post a comment. Oscillators Fibonacci Bollinger Levels Momentum Strategy Stochastic Oscillator Strategy Stochastic Oscillator Features How to Use the Relative Strength Index Chaikin Binary True Strength Index Commodity Channel Index Directional Movement Index On-Balance Volume Indicator Money Flow Index DeMark Indicator Fibonacci Retracements. Developed by Bands Up Themes Ltd.
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