Bollinger Band Price Action in Ranging Markets

Bollinger Band Trading Indicator is also used to identify periods when a market trend is overextended. The guidelines below are considered when applying this indicator to a sideways trend.

Bollinger Band Trading Indicator is very important because it's used to give trading signals that a price breakout may be upcoming.

During a trending market these techniques do not hold, this only holds as long as Bollinger Band are pointing sideways.

• If the market price touches the upper band it can be considered overextended on the upside - overbought.
• If the market price touches the lower band the currency can be considered overextended on the bottom side - oversold.

One of the uses of Stock Indices Bollinger Band indicator is to use the above overbought & oversold guidelines to establish buy & sell targets during a ranging market.

• If price has bounced off the lower band crossed the center-line moving average then the upper band can be used a sell level.
• If price bounces down off the upper band crosses below the center moving average the lower band can be used as a buy level.

Trading Bollinger Band in Ranging Markets - Bollinger Band Trade Strategy

In the above ranging market the instances when the price hits the upper or lower bands can be used as profit targets for long or short Stock trade positions.

trades can be opened when the market hits the upper resistance level or lower support level. A stop loss order should be placed a few pips above or below depending on the trade opened, just in case the price action breaks out of the range within these Bollinger bands.