For example, if a stock explodes above the bands, what do you think is running through my mind? It is even more powerful when combined with other tools to create high probability trade setups. Al Hill is one of the co-founders of Tradingsim. Volatility describes the degree by which an exchange rate varies over time. Even though the 5-Feb spike low broke the lower band, Bollinger Bands are calculated using closing prices so signals should also be based on closing prices.
Bollinger bands can help you establish a trend's direction, spot potential reversals and monitor volatility. All of this can help you make better trading decisions if you follow a few simple guidelines.
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4 thoughts on “Bollinger Bands reversal with high accuracy”
Bollinger Bands Trend Reversals- Double Tops and Double Bottoms. A Forex trader should wait for the price to turn in the opposite direction after touching one of the bands before considering that a reversal . Bollinger Bands ® are among the most reliable and potent trading indicators traders can choose from. They can be used to read the trend strength, to time entries during range markets and to find potential market tops. The indicator is also not a lagging indicator because it always adjusts to price. Reversal Patterns with Bollinger Bands Indicator. A great way to learn how does Bollinger Bands work is to look for reversal patterns given by Japanese candlestick techniques. Such reversal patterns are Doji candles, bullish or bearish engulfing, morning and evening stars, dark-cloud cover and piercing, hammer reversal and hanging man, and so on.