Bollinger Bands indicator
The Bollinger Lane indicator is a full forex trading strategy.
The Bollinger Band indicator is an interesting enough algorithm to help binary option traders. The distinctive feature of this Forex indicator is that it forms a kind of flexible price channel, inside which the price fluctuates (practically without going beyond its limits). By working with such a tool, the trader can receive signals for both the purchase of Call options and the purchase of Put contracts.
Bollinger Lane Indicator Characteristics
The recommended taymfreyma: any
Recommended base assets: any
Bollinger Lane Indicator Description
The algorithm is three sliding averages constructed with a displacement with respect to each other. They appear directly on the price chart, forming a kind of price channel within which fluctuations pass.
From time to time (but rarely enough) the price goes beyond this price channel. However, most of the time, the oscillations pass inside. The two outermost bands define the range. In addition to them, there is also a middle line in the indicator, which is also useful. Especially at moments when a strong market movement begins.
Bollinger bands are levels of resistance and support, only flexible. With their help it is much easier for the trader to find on the chart situations when the price can turn and go in the opposite direction. This technical analysis tool has two types of signals - trending and counter-trending. For binary option traders, it is the second type that is more interesting. Although many successfully use the first.
Bollinger 's bands occasionally diverge, indicating an expansion of volatility in the market, and then converge, defining a narrowing of volatility. With the increasing volatility of Forex currency pairs, the trader can expect to be able to catch the trend. When it is narrowed, it is worth trying to work in the current channel.
How do I interpret Bollinger Gangs indicator data?
If the Forex channel is narrowed, then sharp price pulses are likely to be expected.
If the price goes beyond the bands, you can expect the current trend to continue.
In most cases, if the price touches the bottom line, it will reach the top line.
If the bottom line of the narrow corridor is broken, the signal for sale, if the top line is for purchase.
Bollinger Lane trading signals
Let 's look at the trade signals offered by this algorithm. As we have already noted, there are two options. When the price approaches one of the faces, the trader can expect to start a reversal in the market. Such a signal is particularly relevant at moments when Bollinger 's lines are narrowed and close together.
When you touch the top face of the indicator, a signal appears for the purchase of the Put option. We recommend waiting for the bounce to make the signal stronger. If you touch the bottom face, you can purchase the Call option. In this case, it is also recommended to pay attention to the bounce.
In order to minimize the number of false signals, we recommend the use of additional tools. In particular - pork analysis. If the upper face is touched by a turning model (for example, a falling star or absorption), the probability that the price will actually go in the opposite direction increases significantly. The same can be said of touching the bottom face. In order to amplify the signal, it is desirable to find a turning candle model.
Trending signals can be found quite easily when the Bollinger band indicator expands. When this happens, it is not recommended to open deals for reversal. You can try trading as part of a developing one-way movement.