Friday, August 21, 2009

Bollinger Bands (Common Chart Indicators)

Bollinger Bands

Bollinger bands are used to measure a market's volatility. It is a tool that tells us whether the market is quiet or active. When the bands are close together, it means the price is quite and when the bands expand, it means the price is active.

The Bollinger Bounce

One thing you should know is that price tends to return to the middle of the bands which means we will open a position when the price bounces at a certain levels (support or resistance). The strategy is best used when the market is ranging.

The Bollinger Squeeze

The bollinger squeeze is pretty self explanatory. When the bands "squeeze" together, it usually means that a breakout is going to occur.


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