The graph below exhibits recent prices of Apple. The standard Bollinger bands are added in blue.
The graph exhibits tons of helpful information. It is apparent from the graph above that the price follows the upper band at the conclusion of May to the start of June and in July. In the above graph, you can also see a lot of times when the center line supports or resists the movement of price from one band to the other.
It is evident that in the beginning of May and then in June, the stock overbought and the price decreased on these occasions.
Many of the programs used for charting with Bollinger bands make use of the settings as BB(20,2.0), meaning standard 20 bars with 2 standard deviation numbers. This is the typical view, this is how everyone uses this amazing instrument for trading. While it is completely fine to use this method, there are some other techniques that are better and effective.
Begin thinking differently from the common people and you might be able to gain more benefit from the signals of this instrument. In the following graph we have employed 13 bars rather than 20 bars in the last chart.
This graph provides you with considerably more information. The 13 bar bands for this chart are shown with red, whilst the 20 bar bands are indicated with blue. In this chart, the price movement is much more near to the upper red band at several places. On all the three uptrend, it appears to paint a better boundary.
In addition, the previous chart did not reveal that the lower band supported the price in the middle of may and middle of June. The price movement seems to be represented more precisely with the 13 bar input.
You must be thinking now that this isn't a surprise. That is to say, if we reduce the lines down to one, then it would precisely follow the price motion in an accurate way. But, if you want to be one step ahead of the people with intraday trading then you need to experiment with several time frames for the bands.
Here is a chart with an 8 period Bollinger band added. Why don't you look at this graph and see what you can comprehend and foretell regarding the support levels.
The graph exhibits tons of helpful information. It is apparent from the graph above that the price follows the upper band at the conclusion of May to the start of June and in July. In the above graph, you can also see a lot of times when the center line supports or resists the movement of price from one band to the other.
It is evident that in the beginning of May and then in June, the stock overbought and the price decreased on these occasions.
Many of the programs used for charting with Bollinger bands make use of the settings as BB(20,2.0), meaning standard 20 bars with 2 standard deviation numbers. This is the typical view, this is how everyone uses this amazing instrument for trading. While it is completely fine to use this method, there are some other techniques that are better and effective.
Begin thinking differently from the common people and you might be able to gain more benefit from the signals of this instrument. In the following graph we have employed 13 bars rather than 20 bars in the last chart.
This graph provides you with considerably more information. The 13 bar bands for this chart are shown with red, whilst the 20 bar bands are indicated with blue. In this chart, the price movement is much more near to the upper red band at several places. On all the three uptrend, it appears to paint a better boundary.
In addition, the previous chart did not reveal that the lower band supported the price in the middle of may and middle of June. The price movement seems to be represented more precisely with the 13 bar input.
You must be thinking now that this isn't a surprise. That is to say, if we reduce the lines down to one, then it would precisely follow the price motion in an accurate way. But, if you want to be one step ahead of the people with intraday trading then you need to experiment with several time frames for the bands.
Here is a chart with an 8 period Bollinger band added. Why don't you look at this graph and see what you can comprehend and foretell regarding the support levels.
About the Author:
If you wish to learn how to trade Bollinger bands you'll find very in depth information and a great download on http://www.bollingerbandgenius.com. If you wish to trade Bollinger bands, then you should learn how to do it right.
No comments:
Post a Comment