General Bollinger Bands guidelines

Discussion in 'Interactive Forex Trading' started by free forex, Feb 7, 2019.

  1. fr

    free forex Member
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    Bollinger Bands guidelines

    forex signals : W-Bottoms
    W-Bottoms were part of Arthur Merrill's work that identified 16 patterns with a basic W shape. Bollinger uses these various W patterns with Bollinger Bands to identify W-Bottoms. A “W-Bottom” forms in a downtrend and involves two reaction lows. In particular, Bollinger looks for W-Bottoms where the second low is lower than the first but holds above the lower band. There are four steps to confirm a W-Bottom with Bollinger Bands. First, a reaction low forms. This low is usually, but not always, below the lower band. Second, there is a bounce towards the middle band. Third, there is a new price low in the security. This low holds above the lower band. The ability to hold above the lower band on the test shows less weakness on the last decline. Fourth, the pattern is confirmed with a strong move off the second low and a resistance break.

    forex signals : M-Tops
    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.
    In its most basic form, an M-Top is similar to a double top. However, the reaction highs are not always equal. The first high can be higher or lower than the second high. Bollinger suggests looking for signs of non-confirmation when a security is making new highs. This is basically the opposite of the W-Bottom. A non-confirmation occurs with three steps. First, a security creates a reaction high above the upper band. Second, there is a pullback towards the middle band. Third, prices move above the prior high but fail to reach the upper band. This is a warning sign. The inability of the second reaction high to reach the upper band shows waning momentum, which can foreshadow a trend reversal. Final confirmation comes with a support break or bearish indicator forex trading signals .

    forex signals : Walking the Bands
    Moves above or below the bands are not signals per se. As Bollinger puts it, moves that touch or exceed the bands are not forex trading signals , but rather “tags”. On the face of it, a move to the upper band shows strength, while a sharp move to the lower band shows weakness. Momentum oscillators work much the same way. Overbought is not necessarily bullish. It takes strength to reach overbought levels and overbought conditions can extend in a strong uptrend. Similarly, prices can “walk the band” with numerous touches during a strong uptrend. Think about it for a moment. The upper band is 2 standard deviations above the 20-period simple moving average. It takes a pretty strong price move to exceed this upper band. An upper band touch that occurs after a Bollinger Band confirmed W-Bottom would signal the start of an uptrend. Just as a strong uptrend produces numerous upper band tags, it is also common for prices to never reach the lower band during an uptrend. The 20-day SMA sometimes acts as support. In fact, dips below the 20-day SMA sometimes provide buying opportunities before the next tag of the upper band.
    Bollinger Bands reflect direction with the 20-period SMA and volatility with the upper/lower bands. As such, they can be used to determine if prices are relatively high or low. According to Bollinger, the bands should contain 88-89% of price action, which makes a move outside the bands significant. Technically, prices are relatively high when above the upper band and relatively low when below the lower band. However, relatively high should not be regarded as bearish or as a sell forex signals . Likewise, relatively low should not be considered bullish or as a buy signal. Prices are high or low for a reason. As with other indicators, Bollinger Bands are not meant to be used as a stand-alone tool. Chartists should combine Bollinger Bands with basic trend analysis and other indicators for confirmation.

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  2. Lu

    Luis Felipe New Member
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    Very nice post. Thanks for this info. clapping hands
     
  3. He

    Herbert New Member
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    Need to master this
     
  4. Ke

    Kelvin New Member
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    Let me test the strategy. will give feedback
     
  5. Od

    Odd8all New Member
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    Anyone tested this yet, I have tried in the past with Bollinger bands and little success.
     
  6. Na

    Nasr Moh New Member
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    very good information. but is there any mt4 indicator that can show us these Ms & Ws directly and easily ???
     
  7. Ni

    Nicky0110 New Member
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    Thanks for sharing. I will try this strategy.
     
  8. ml

    mlawson71 Member
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    Thank you so much for the detailed explanation!
     
  9. da

    daughtry New Member
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    please do you have any screen shots
     
  10. da

    daughtry New Member
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    or better still any further reading material
     
  11. aa

    aabdalrahmain New Member
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    Very nice post. Thanks for this info
     
  12. Re

    Rexscrat New Member
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    Can you upload any video with your strategy? Or do you have any trading guidelines
     
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    Bonforex New Member
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    thank you for the info much appreciated
     

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