Bollinger bands candlestick trading
Bollinger bands are a good measure of volatility of the instrument you bands trading and we can use this to form the basis of a swing trading system for Forex or any other market. The theory is that the settings of the top and lower bands the standard deviation from the moving average contain price action. This often can set up some great trading opportunities. The bollinger bands are a technical indicator similar to the keltner channel as they are both bands and a measure of volatility. Candlestick main difference is the keltner channel uses average true range for the calculation. Bollinger can use the bollinger band strategy on any time frame but like most trading signalsa higher time frame trade setup is often more reliable. We need to candlestick price moving above the middle line of the bollinger band. You want to see price pullback into the bollinger of the middle line to initiate a buy signal. You will then look for a price action setup that shows price has a probability of travelling candlestick to the upside. Bands can also use an opposing trend line break for entry. For selling, we want to see price visit the lower part of the band and either touch or pierce the bands. From there, price pulls back into the area around the 20 period moving average middle line. The bollinger bands actually have a built in indicator for trading taking: One price has touched the middle line for a buy or sell signal, look for price to travel to the upper or lower band bollinger take your trading profits. You can also use a Fibonacci measurement for profit taking and trade management. This is a more advanced bollinger band strategy as I am using a combination of technical analysis to trade this chart. This highlights that while technical indicators such as the bollinger band can aid you in trading, price action will always rule. Bollinger bands can frame price and show you when there is an extreme move worth noting. Your trading system may require price movement touching or exceeding the upper or lower bands before taking a trade. You can use these as a mean reversion system or a continuation swing trading strategy. The mean reversion aspect is a more advanced bollinger strategy and is shown in the second trade example in the last trading. Bollinger bands can keep you objective in your trading by offering you not only a place to consider a trade, but areas to consider taking profits as described above. Whatever way you choose to use the bollinger bands as part of a swing trading strategy, ensure you test it and log a trade plan so you can stay on track. Another use of the bollinger bands is to measure price compression and a break from the consolidation. This is used in conjunction with the keltner channel and is called the squeeze. The Bollinger Band Squeeze can also be a trading system but like every trading method, test your idea before putting money on the line. Mail will not be published required. You can use these tags: Forex Swing Trading Strategy 6: Bollinger Bands Indicator The bollinger bands is made up of three lines: Top band, middle band, and lower band. Using the standard bollinger band setting for this strategy, the lines are: Top line is 2 standard deviations from the middle line to the upside The middle line is a 20 period moving average Lower line is 2 standard deviations to the downside from the moving average Bollinger Bands Standard Settings. Bollinger Bands Strategy For Swing Trading. Bollinger Band Strategy With Fibs and Price Trading. Posted in Simple Swing Strategies. Leave a Reply Click here to cancel reply. Powered by WordPress Designed by: Free WordPress Themes Thanks to Best WordPress ThemesBest Wordpress Hosting and Promo Codes.
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