![]() after narrowing the band, sudden price changes should be expected the longer the course is traded within the narrow limits of the price channel of the horizontal direction (flat), the stronger will be the way out of it.the direction of the trend is very simple: the price chart is between the middle and upper bands - the trend is upward (bullish), the price is between the middle and lower bands - the trend is downward (bearish).a big space between the upper and lower bands indicates price volatility is high, a small space indicates it is low.as the price reaches the lower band, it is considered oversold and tends to rise back up towards the moving average band. ![]() ![]() as the price reaches the upper band, it is considered overbought and tends to fall back towards the moving average band.it identifies whether a price is high or low compared to its recent moving average and predicts when it might fall or rise back to that level.The interpretation of Bollinger Bands is based on the fact that prices tend to remain between the upper and lower bands. the lower band is the moving average - 2 standard deviationsĪ trader can choose the period of the moving average at his discretion, just like the number of standard deviations (standard values of 20 and 2, respectively).the top band is the moving average + 2 standard deviations.the middle band is the usual moving average.This indicator shows the range and rate of price volatility. The Bollinger Bands® indicator is an oscillating indicator, developed by John Bollinger.
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