Bollinger Bands Technical Indicator Strategy

Bollinger Bands indicator acts and is used as a measure of the price volatility. Bollinger Band is a price overlay indicator.

Bollinger Bands indicator consists of three lines or bands: mid band (moving average), an upper band a lower band. These three bands will enclose the price & the price will move within these 3 bollinger bands.

Bollinger Bands indicator forms upper & lower bands around a moving average. The default MA for bollinger bands indicator is the 20-SMA. Bollinger Band use the formula of standard deviation to form their upper and lower Bands.

The example of Bollinger Bands indicator is shown and shown below.

Stock Index Bollinger Band Indicator Strategy - How to Trade with Bollinger Bands Strategies

Bollinger Bands Indicator - How to Trade with Bollinger Bands Index Trading Strategy

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

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

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

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Bollinger Bands Technical Indicator Strategy