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Bollinger Bands Forex Strategies

Bollinger Bands Indicator Strategy

Bollinger Bands indicator acts as a measure of volatility. Bollinger Bands indicator is a price overlay indicator.


Bollinger Bands indicator consists of three lines or bands; the middle band (moving average), an upper band a lower band. These three bands will enclose the price and the price action will move within these three bollinger bands.


Bollinger Bands indicator forms upper and lower bands around a moving average. The default moving average for bollinger bands forex indicator is the 20-SMA. Bollinger Bands indicator use the concept of standard deviations to form their upper and lower Bands.

The example of Bollinger Bands indicator is shown below.

Bollinger Bands Indicator - How To Trade Forex with Bollinger Band Forex Strategy

Bollinger Bands Indicator - How To Trade Forex with Bollinger Band Forex Strategy


Because standard deviation is a measure of price volatility and volatility of the forex market is dynamic, the forex bollinger bands keep adjusting their width. Higher forex price volatility means higher standard deviation and the more the bollinger bands widen. Low forex price volatility means the standard deviation is lower and the bollinger bands contract.


Bollinger Bands indicator use price action to give a large amount of price action movement information. The price information given by the this bollinger bands forex indicator includes:


  • Periods of low volatility- consolidation phase of the Forex market.
  • Periods of high volatility- extended trends, trending Forex markets.
  • Support and resistance levels of the price.
  • Buy and Sell points of the price.

 

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