Bollinger Band Squeeze [ChartSchool] - StockCharts.com
For those of you who are not familiar with Bollinger Bands it's rather a simple indicator. You begin with the 20-day Simple Moving Average of the closing prices.
Price moves in upper bands channel – uptrend, lower - downtrend
It is very simple to identify dominating price direction by simply answering the question: in what part of the Bollinger Bands the price is currently trading? If price stays above the middle line – in the upper channel – we’ve got a prevailing uptrend. If below the middle line – in the lower channel – we have a prevailing downtrend.
I have tried it on different time frames and found this day trading strategy to be surprisingly robust for catching breakout trends.
Under such a condition, overbought or oversold, there is the highest chance of forming the reversal signals. Weak reversal signals usually take the price to the middle band again, and then the price follows the same course again. Therefore, strong continuation signals form close to the middle band when the market is trending.
The simple truth is.
Learning to use and implement a basic intra-day trading strategies can cut your losses by 63% immediately and will increase your profitability chances in the long run.
This is an advanced feature that enables you to smooth your indicator results or add a signal line with a moving average . Details can be found at Indicator Smoothing .
2. Next we move over to the “BarData” sheet where you will enter your indicators in Cells R-RV (of course you don’t have to use them all!). As an example, In columns R and S you will find two Simple Moving Average indicators. You can of course, delete these and enter your own.
M-Tops were also part of Arthur Merrill's work that identified 16 patterns with a basic M shape. Bollinger uses these various M patterns with Bollinger Bands to identify M-Tops. According to Bollinger, tops are usually more complicated and drawn out than bottoms. Double tops, head-and-shoulders patterns, and diamonds represent evolving tops.
Bollinger Bands are powerful signals. Here are two great strategies, for Bollinger Band Squeezes and Bollinger Band Trends.
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Depending on the settings, Bollinger Bands usually contain 99% of the closing prices. And in sideways markets, prices tend to wander from the Upper Bollinger Band to the Lower Bollinger Band. With this being the case, many traders use Bollinger Bands to trade a simple trend fading strategy: They SELL when prices move outside the Upper Bollinger Band and BUY when prices move outside the Lower Bollinger Band. This actually works reasonably well in a sideways market, but in a trending market you get burned.
Contracting bands warn that the market is about to trend: the bands first converge into a narrow neck, followed by a sharp price movement. The first breakout is often a false move, preceding a strong trend in the opposite direction. A contracting range [C] is evident in June 1998: the bands converge to a width of $2, followed by a breakout in July to a new high.