" There is no failure except in no longer trying "Bollinger band are designed to capture the majority of the price movement, when the price move beyond the upper or lower band, they are considered high (overbought ) or low (oversold) on a relative basis. used the bollinger band for indication of when a breakout or breakdown is imminent, when the outside band get very narrow, it mean the price is consolidating and is getting ready to breakout either up or down. At this point it is dangerous to take posisition because you don`t know if it is going to break up or down.
Sometimes , when the price penetrates bollinger ban and only tries new level , then comeback right away, it may be a false breakout. If it is a breakout then you have the possibility to trade against the trend. However it is important if you make sure the breakout is false.
Bollinger band show the strenght of the market :
1. Bollinger band contract when the market is quiet, without sharp price movement consolidating to continue the prevailing trend.
2. When price move outside the band , a continuation of the current trend is implied.
3. A move that originates at one band tends to go all the way to other band, this observation is useful when projecting price targets.
4. Bottom and tops made outside the bands followed by bottoms and tops made inside the band call for reversal in the trends.
5. Sharp price changes tend to occur after the bands tighten as volatility lessens.
6.Bollinger band widen when the prevailing trend becomes stronger or at the beginning of new trend.
How to use Bollinger band :
Using bollinger band as intended by their inventor one must either subscribe the emphatic with the following premises about market behavior :
1. Low volatility tends to predicate sharp price changes
2. A move that star at one of the upper or lower band, should go all the way to the other
3. If the market top or bottom, first outside the bands and then within bands, the market is likely to reserve the recent trend.
4. If and when the market moves outside the bands the move shoudl should continue.
Sometimes , when the price penetrates bollinger ban and only tries new level , then comeback right away, it may be a false breakout. If it is a breakout then you have the possibility to trade against the trend. However it is important if you make sure the breakout is false.
Bollinger band show the strenght of the market :
1. Bollinger band contract when the market is quiet, without sharp price movement consolidating to continue the prevailing trend.
2. When price move outside the band , a continuation of the current trend is implied.
3. A move that originates at one band tends to go all the way to other band, this observation is useful when projecting price targets.
4. Bottom and tops made outside the bands followed by bottoms and tops made inside the band call for reversal in the trends.
5. Sharp price changes tend to occur after the bands tighten as volatility lessens.
6.Bollinger band widen when the prevailing trend becomes stronger or at the beginning of new trend.
How to use Bollinger band :
Using bollinger band as intended by their inventor one must either subscribe the emphatic with the following premises about market behavior :
1. Low volatility tends to predicate sharp price changes
2. A move that star at one of the upper or lower band, should go all the way to the other
3. If the market top or bottom, first outside the bands and then within bands, the market is likely to reserve the recent trend.
4. If and when the market moves outside the bands the move shoudl should continue.
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