At the start of each trading session, you will receive an email with the author's new posts. The point is the further away from the median data point, the less likely it is to find these measurements.
This is a four hour trading of the AUDUSD, with a Bollinger Band overlaid on the price action. The middle blue wiggly line is a 20 period moving average, and the other two wiggly lines are showing trading standard deviations above and below the moving average. Whenever price is outside of the bands, especially on fast moves outside of the bands, price action tends to quickly revert back inside the bands, usually to the moving average. Bollinger price action moves above the upper wiggly line, prices are considered overbought, and if price action moves bollinger the lower wiggly line, prices are considered oversold.
In addition to the Bollinger Bands on the chart, I have also marked in two bands our supply zones and one demand zone. So…would you take that short trade? I hope you would be interested in this trade! As bollinger previously, a potential first target would be the moving average; however, I prefer to use previous demand for a target on short trades, and previous supply for targets on long trades.
While I would bands a faster, farther move out of the band to take a trade, this example still did fit our criteria. Another helpful use for the Bollinger Band tool is to help you stay with a trending market. In an uptrend, very often the trend will be held between the moving average and the upper band. In a downtrend, usually the move is held between the moving average and bands lower band. Both examples are demonstrated in the following chart.
So there you have a breakdown on a couple of easy ways to use the Bollinger Bollinger to help you trade: Combined with our supply and demand strategy can make these bands a very powerful tool. This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever.
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