Bollinger Band

Bollinger Bands developed by John Bollinger. Bollinger Bands displayed with three lines. If you are short term trading used 10 day moving average, and 20 days moving average for intermediate term trading and 60 days for longer term trading. Price is tend to stay within upper and lower band.

The characteristic of Bollinger Bands is the space between two lines based on volatility of the prices. If price have high volatility the band begin more widen. During The Stagnant Price the band become narrow. Line in the middle is simple moving average line.

For The standard deviation I suggest you to used 1.5 till 2.5. Lower the standard deviation tighter The Bollinger Band, used this for 10 day moving average. Higher the standard deviation wider The Bollinger Band, this is good for 60 day moving average. Standard Deviation is a statistical term that provides a good indication of volatility. Uses this can make the bands react quickly to price movement and reflect periods of high and low volatility.

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BUY signal confirm happens when: Candlestick reach the lower band or moves below lower band. When candlestick penetrate the lower band and remain above the lower band and back to lower band. Second lower band lower than first one that’s good signal to buy. BULLISH condition confirmed when the price moves above the middle moving average!!

SELL signal confirmed when candlestick move above upper band. Or creates two tops. The BEARISH TREND happens when price cross down the middle band