![\"\"](\"https:\/\/www.mytradingland.com\/uni\/wp-content\/uploads\/2024\/08\/bollinger-bands-picture.png\")
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Bollinger Bands show you overbought & oversold price levels for an instrument & this information is useful in detecting trends as they form. <\/p>\n
Bollinger Bands consist of an upper, middle, & lower band which are superimposed on your chart.<\/p>\n
is automatically formed by setting the standard deviation to 2.0 so that 95% of the candles that form will be within the Upper Band.<\/p>\n
is automatically formed by taking average prices of the instrument over a period which is 20 days by default (but you can change this)<\/p>\n
is also formed by setting the standard deviation to 2.0 so that 95% of the candles that form will be within the Lower Band, hence better accuracy.<\/p>\n
If you set the standard deviation below 2, some candles will fall outside the bands & if you set it above 2, only few candles will be able to touch the bands; so, you may not see any breakouts.<\/p>\n
![\"\"](\"https:\/\/www.mytradingland.com\/uni\/wp-content\/uploads\/2024\/08\/bollinger-bands-squeeze.png\")
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If the Bollinger Bands squeeze together in an upward trend, it indicates the market has slowed down & is about to rally (the calm before the storm). Hence you should prepare to execute a buy trade to benefit from the potential rise.<\/p>\n
If the bands squeeze together in a downward trend, it also indicates the trend has slowed down & is about to surge further downward so you should prepare to execute a sell trade to benefit from the potential fall.<\/p>\n
When the price touches or breaks past the upper band, it\u2019s an indication that the instrument is overbought & the price could soon start falling. So you can open a sell trade to take advantage of the fall.<\/p>\n
When the price touches or falls below the lower band, it is an indication that the instrument is oversold & its price could soon start rising. You can open a buy trade to take advantage of the rise.<\/p>\n
The drawback of Bollinger Bands is that it depends on a Simple Moving Average so results may not be 100% accurate. You can use Bollinger Bands alongside other indicators such as Relative Strength Index (RSI) for further confirmation & comfort.<\/p>\n
The drawback of Bollinger Bands is that it depends on a Simple Moving Average so results may not be 100% accurate. <\/p>\n
You can use Bollinger Bands alongside other indicators such as Relative Strength Index (RSI) for further confirmation & comfort.<\/p>\n","protected":false},"excerpt":{"rendered":"
Bollinger Bands show you overbought & oversold price levels for an instrument & this information is useful in detecting trends as they form. Bollinger Bands consist of an upper, middle, & lower band which are superimposed on your chart. The Upper Band: is automatically formed by setting the standard deviation to 2.0 so that 95% […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-422","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\n