Bollinger Bands

[DennisEn]

Bollinger Bands

by greencat
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A band plotted two standard deviations away from a simple moving average.

Above is an example of bollinger bands, the price of the stock is banded by an upper and lower band along with a 20-day simple moving average.

Because standard deviation is a measure of volatility, Bollinger Bands adjust themselves to the market conditions. When the markets become more volatile the bands widen (move further away from the average), and, during less volatile periods, the bands contract (move closer to the average).

This is among one of the most popular technical analysis techniques. The closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.

greencat:notes
I use the bollinger bands to help me find socks on the bottom. I also like to find stocks where the bollinger band has closed it tight. I will put that symbol on my watch list because usually it meand the sock is going to move one way or the other. A pretty good move up or down. I would never buy solely on the bolinger bands.

[DiskoCaraci]

I've read that about what you say about the tightening of bolinger bands. That it's an indication it's about to make some kind of move.

[DennisSels]

yes one way or another it will move so that only gets them on the watch list to see which way they are going to go

[dgskbciw08]

I have a perfect example per Greencat's contraction statement. This is the chart for one of my fav stocks, USMO. Look at the time period of March, nice contraction, then the stock moves up (my fav direction). Also observe the downward fall in mid-November, contraction, then the stock drops:
Attached Images
File Type: jpg bollinger_example_USMO.jpg (27.1 KB, 34 views)
Last edited by BadThad; 07-10-2007 at 03:19 PM.

[Diannapt]

I read Bollinger on Bollinger Bands. He is not the easiest to understand. He runs a bunch of web sites which may or may not be of value to people. I tried one a while ago and didn't fully understand it so I moved on. I think he said he originally developed this for options. I don't trade options. That was the hardest part of the series 7 test for me so I figure that was a good sign not to mess with them.

I use the Hammer into the lower BB with stocks in an uptrend as a buy signal. Recent example was ABAT.


By Evil_Eye_21201

I use E trade Pro charts when buying and they use a different period for the Bollinger Bands. I am not sure what the period is but the two hammers I have shown are the ones I used as buy signals. On the E Trade charts it showed them into the Lower BB. I was out of ABAT when the news of the up listing came out and I missed it. There was a Doji the day before after two down days which I missed because I was tied up in court with a trial. Please note: I am not a Lawyer, I just out think them.
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