Bollinger Band Analysis & Bollinger Trading Signals

Created by John Bollinger

The Bollinger Band structure consists of three distinct lines: the central line represents a 20-period Simple Moving Average.

The lines are then made at a certain distance from the average movement. These lines are what create the top and bottom boundaries.

Bands sit at spots set by standard deviation. This tool measures ups and downs in the bitcoin or BTCUSD market.

BTCUSD market volatility is always changing, so standard deviations shift too. Since Bollinger Bands use standard deviation to set their distance, the bands constantly adjust to match current BTCUSD conditions.

When the btcusd markets become more volatile, the bands widen & they contract during less volatile periods.

The 3 Bands are made to include most of the bitcoin price changes. The middle band is the basis for the market's direction, and it is usually a simple moving average over 20 periods.

This middle band acts as the base for the upper and lower bands. Their distance from the middle depends on market volatility. The upper band sits two standard deviations above the middle Bollinger band. The lower one lies two standard deviations below it.

Bollinger Band Bitcoin Indicator Analysis in Bitcoin

BTCUSD Analysis & Generating Signals

Bands provide a relative meaning of high & low

Used to identify periods of high & low volatility

Used to identify periods when bitcoin prices are at the extreme regions

the Squeeze

The Bollinger bands tighten as market volatility reduces, this identifies periods of consolidation. Sharp bitcoin price breakouts tend to occur and happen after the bands tighten.

Bitcoin Sideways? Check Out Bollinger Bands for BTCUSD Analysis

Pattern of Consolidation

the Bulge

Bitcoin price breaks band edges. Expect the trend to keep going.

Bollinger Bands on BTCUSD - Bollinger Band Analysis for Bitcoin

Reversal Signals

When the price goes beyond the bands and then comes back inside, it often means the market trend is changing direction.

Identifying Bitcoin Reversal Clues - Analysis of the Bollinger Band Indicator for BTCUSD Trading

The Head Fake - Bitcoin Whipsaw

Traders should remain vigilant for false breakouts, commonly referred to as whipsaws or head fakes.

Bitcoin Price often quickly breaks out in one direction after the Squeeze setup, leading many traders to believe the breakout will continue, but it quickly reverses and makes the real, more important breakout in the other direction.

Traders who act immediately on an initial breakout frequently find themselves misaligned with the actual direction of Bitcoin's price movement. On the other hand, those ready for a potential 'false breakout' can quickly exit their initial position and re-enter a trade that aligns with the ensuing reversal. To verify such scenarios, combining Bollinger Bands with additional technical indicators is highly recommended.

Obtain Further Instruction Sets and Programs: