Bollinger Bands - Technical Analysis

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Bollinger Bands
Bollinger Bands provide several useful signals, including confirmation of trend and an indication of volatility. Overview
Bollinger Bands can provide an indication of:
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whether prices are relatively high or low whether current trends are likely to continue or reverse the volatility of a market, based on the width of the band.

http://www.chartfilter.com/reports/c7.htm (1 of 3) [11/18/2006 8:27:25 PM]

According to Bollinger. but they do not." He goes on to say. The bands spread further apart during volatile markets and come closer together during calmer markets. For example. the market may be about to initiate a new trend. the current trend may be ending. using different indicators all derived from the same series of closing prices to confirm one another. Two winding parallel lines above and below a central moving average (MA) create a band that contains the majority of price movements within a channel. as is commonly believed.combining price range and volume He recommends against using the Commodity Channel Index (CCI) for the reason above "See the description for each of these indicators for further information. For example. The difference is that Bollinger Bands are also sensitive to volatility in the market. This is similar to moving average envelopes. a continuation of the current trend is implied. A crossing below the 20 day average would establish the lower band as a price target. The indicators he recommends to complement Bollinger Bands are: q q q q RSI or MACD -. Watch for initial penetrations of a band. "It is the action of prices near the edges of the envelope that we are particularly interested in. give absolute buy and sell signals based on price touching the bands. whereas Bollinger Bands are placed two standard deviations above and below the moving average. particularly if other indicators confirm a potential move.based on price alone On-Balance Volume (OBV) -." Signals Bollinger Bands provide the following useful signals: Trend: when prices move outside the bands.Bollinger Bands . if prices bounce off the lower band and cross above the 20 day moving average. Technically speaking. When the two bands are very tight. Price targets: a move that originates at one band tends to go all the way to the other band. this technique is one of the most popular forms of envelope or channel indicator.htm (2 of 3) [11/18/2006 8:27:25 PM] . the upper band becomes the upper price target. Interpretation John Bollinger has written that. What they do answer is the perennial question of whether prices are high or low on a relative basis. http://www.Technical Analysis Developed by John Bollinger." As with most indicators. "Trading bands are one of the most powerful concepts available to the technically based investor. signals generated by Bollinger Bands should be confirmed using complimentary indicators. When the bands are unusually far apart. moving average envelopes are plotted at a fixed percentage above and below a moving average. which is usually 20 days.com/reports/c7.combining closing prices and volume Money Flow -. Strongly trending markets will often stay touching and occasionally penetrating the band for long periods. one of the biggest mistakes in technical analysis is the multiple counting of the same information. Using two standard deviations ensures that 95% of the price data will fall between the two outside bands. This observation can be used projecting price targets.chartfilter.

com/reports/c7.Email © 2006 MHP Systems Inc. Newsletter subscribers are emailed links once a month to the latest newsletters. low. as volatility lessens.) Free Screener Always free .95. the high. you can interpret this as a loss of momentum and a reversal is possible.No Log-in! The Mini-Screener is a free technical and fundamental stock screener with 10 technicals and 9 fundamentals available for a basic stock search. on a subsequent move. Free Newsletter Subscribe to our free newsletter: How-to articles on specific technical indicators and charts and Stockscreener tips and increase your knowledge of Technical Analysis. Try it now. open and close.Login .Technical Analysis Volatility (width of bands): sharp price changes tend to occur after the bands tighten. Each candlestick is composed of four values. Many times the subsequent move will reach a higher or lower price but the loss of momentum is still indicated. Disclaimer | Privacy | Terms of Use http://www. Fundamentals and Technical Handbook We've taken the indicators and fundamental reports from the ChartFilter website and put them all together in this printable.chartfilter.Bollinger Bands .Register . PDF (Adobe Acrobat). Candlestick Patterns Candlestick charting has been in use in Japan for the last 300 years and has received world wide recognition. Company | Products | Advertising | Support | Contact | Free Screener | Links Home . fails to reach the band. Learn about them in this informative ebook for just $9. 190-page PDF (Adobe Acrobat) reference ebook for just $19.htm (3 of 3) [11/18/2006 8:27:25 PM] .95 (Please allow up to 24 hours for the email with your ebook link to arrive. Momentum: when the price moves above or below the Bollinger band then.

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