Bollinger bands indicator used to measure the volatility and determine the direction of the trend. This indicator can also be used to identify the conditions of overbought and oversold.? Bollinger bands discovered and developed by John Bollinger in 1980.
Bollinger Bands consist of a single line of SMA ( Simple Moving Around ) and two bands ( band ) that is above or below the SMA line. The upper band known Upper Bollinger Band . And lower bands called Lower Bollinger Band.
The principle of Bollinger bands are prices will tend? to the line of school if the price touched top bands or lower bands . When price is moving and touching top bands , at some point the price will reverse direction and touch the school , and vice versa, if the price moves to reach bands below, prices will tend to turn to high school.
volatility is measured by a wide band range between the upper and lower Bollinger Bands Bollinger bands. The greater the distance between the two means of greater volatility tape. Vice versa. Talking volatility means that we talk about the market being crowded or deserted.
you can determine the conditions of overbought if the price moves to touch the upper band and the closing price is still below the upper band occurs. While oversold conditions be achieved if the price moves to touch the lower band and the closing prices go above the lower band.
Terms uptrend occurs when the price rose by (enter) the upper band and the closing price is outside of the band, while a downward trend occurs when prices crossed the tape lower and closed outside of the band.
By knowing the state of overbought and oversold then you can determine the most appropriate time to enter the market.
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