Bollinger Bands
Bollinger Bands is a tool used for technical analysis of financial markets. This technique was invented by John Bollinger in the early 1980s.
John Bollinger's latest work on Bollinger Bands: BB DVD (original) Our most complete material on Bollinger Bands: BB Book Learn how to use Bollinger Bands Bollinger Bands are an indicator that surround the chart price today is a standard graphics packages.
Is calculated from a moving average (simple or exponential) on the closing price of the two bands that wrap obtained from add and subtract the mean value 2 standard deviations.
Bollinger bands are a popular technical indicator for traders in any market. A more useful way to trade with Bollinger bands is to use them. This measure of volatility (standard deviation) is what makes the amplitude of the bands.
What is the purpose?
It serves to locate the price within a range relative to their past evolution.
Helps determine whether or not the value is volatile.
Lets get price levels and determine whether the value is in areas of support or resistance dynamics.
How do you use?
The default values used in the calculation are 21 for the average and 2 standard deviations. If you reduce or increase significantly the mean value is adjusted in the same way the number of standard deviations. For mean values above 50 (long term) => 2.5 SD, mean values close to 10 (short term) => 1.5 deviations.
Bollinger Bands are the second indicators I use after the candlesticks. In fact the combination of candlesticks and Bollinger Bands makes the signals for me. If prices are above average and near the upper band are relatively high, there may be overbought. If they are below average and close to the lower band are relatively low, there may be oversold.
If the belts are tightened on prices is indicating that the value is very low volatility, unlike the bands widen if the value is volatile. This provides an important aid to the investors operating options.
They often produce large, rapid movements in prices after periods in which narrowing of the bands.
Price movements that originate in one of the bands tend to aim at the opposite side, making it easier to determine these price targets. Many of the price extreme (maximum or minimum) of the movements taking place in the band or its vicinity.
When prices exceed the upper band is a sign of strength of value, on the contrary are below the lower band is a sign of weakness. When prices fall outside any of the bands is to assume the continuation of the movement.
Its joint use with other indicators help determine with high probability the roofs and floors of the markets.
Trading Tip
-Máximos/mínimos Achieved with prices outside the bands followed by max / min achieved with prices within the bands are usually patterns of change in trends
-When the bands are kept nearby, are symptomatic of a period of low volatility in share price. When kept away from each other, are indicating a period of high volatility. When you have only a slight slope and remain roughly parallel for a long enough time, will find that the share price fluctuates up and down between the bands, as in a canal. When this behavior is repeated regularly with a consolidating market, the investor can, with some confidence, using a touch (or near) the top or bottom band as a sign that the share price is approaching the limit of its trading range, and thus is likely to change in the price trend.
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