Bollinger Bands lines are used to measure the volatility of the market. Basically, this little tool tells us whether the market is quiet or choppy. When the market is quiet, the bands (closer to each other), and when the market is choppy, the bands expand. For easier understanding, see the following chart: while the price was quiet, the bands were close to each other, but when the price moved up, the bands are widened. The same would happen and that the price has dropped. The first thing you need to know about Bollinger Bands is that price tends to return to the middle of the bands. It’s all about Bollinger Bounce. You can see a classic Bollinger bounce. The reason why this is the rebound occurred because Bollinger Bands act like mini support and resistance levels. Band’s are stronger the longer the time frame you are looking at the chart (H1, H4, D1). Most traders have developed systems that rely on these jumps. This strategy is best used when the market range (ranging market) and there is no clear trend. Bollinger squeeze is pretty self-explanatory. When the Band line “squeeze” together, it usually means that they will appear breakthrough (break out). If the candles start to break out below the lower band, it is common that the upward trend continues. And also in a downtrend.
The method has been trading under the Bollinger Bands and it represents this powerful indicator.
Sell Signal for the position
When the market is found close to the lower Bollinger Bands and Bollinger Bands begin to grow, the middle Bollinger starts moving up down, generated a signal for a drop in prices.
SL (stop loss) is placed above the middle line of Bollinger bands.
Buy Signal for the position
When the price chart (market price) is near the upper line of the Bollinger Bands, and the upper and lower Bollinger began to spread to the middle Bollinger goes up generated by the price increase.
SL (stop loss) is usually placed below the middle line of Bollinger bands.
An essential role for closing trading positions in most cases corresponds to the situation when the line Bollinger Bands begin to gather. Open Bollinger Bands are confirmed by the intensity of the prevailing trend, while the narrower lines are monitored sideways trends.
The situation for entry points into the position:
When the market is found below the line of the lower Bollinger bands and decreasing candle breaks through the lower boundary line of the Bollinger Bands. It is needed to wait for the next growing candle that the candle’s body has gone through the line of the lower Bollinger bands up. The signal is generated by the buying position. When the market is above the upper boundary line of the Bollinger Bands it is needed to wait for the next downward candle. Candle’s body pierces the upper Bollinger bands down. The signal is generated by the selling position. Projected TP (take profit) can be projected to a larger range of price movement. It requires a longer monitoring the development of trading transactions or application of other rules to protect capital. SL and TP always can be designed in terms of risk control in accordance with the money management rules on the trading account.
Technical analysis is provided effective monitoring of prices movement on the hourly chart. It is attempting to predict future market activity by analyzing market data, price trends and trading volume. The largest trading volume is when London and New York overlap. What does it mean? It means that European and the US markets are opened by 1pm-5pm by London time zone and 8am-12pm by EST time zone.
Software for automated trading is allowed to track a large number of parameters and make decisions in real time. Algorithmic trading confers an advantage over marketers who manually by trading orders. Algorithmic trading significantly is improved market liquidity. Automated trading is able to notice of opportunity in the market, independently conduct the transaction of buying and selling a particular currency pair. The duration of such transactions is often measured in seconds, in some cases, such transactions may last only a few milliseconds. Trading signals can be shown and the automatic trading transaction will be executed.
Trading strategy is based by the news, hedging trading and technical analysis. In this case we can see trading strategy based on charts MT4 trading platform. It is called short or selling trading strategy. It is also existed a long or buying strategy.
Sterling was under pressure after during the morning announced that the expectations of industrial orders in the UK deteriorated in March to 0.0 points from 10.0 in February, while analysts expected a decline of 1.0 points to 9,0. Industrial orders in the UK have deteriorated in March by 10.0 points to 0.0 points from 10.0 realized in February. Analysts had expected a decline of 1.0 points to 9.0. The result above 0.0 points indicates the expected increase in the volume of orders, and under the downsizing. Consumer price inflation in the UK was 0.0% in February after growth of 0.3%, while economists predicted 0.1%. On a monthly basis the index increased 0.3% in February, which was in line with forecasts of economists. Inflation input producer prices in the UK rose in February by 0.2%, and expected to grow by 1.6%. Output prices grew by 0.2 percent in February, while the predicted decrease of 0.1 percent after falling 0.4 percent in January. House Price Index in the UK fell in February to 8.4% from 9.8% in the previous month. Analysts had predicted growth at 10.2%. Inflation in retail prices in the UK fell in the last quarter to 1.0% from 1.1%.
It can see setting parameters of Bollinger Bands. They are period 20 and deviation. It is included all time frame
GBP/USD under pressure. The pair is posting a rebound but stands below its resistance. On the hourly chart of currency data GBP/USD price ranged between middle and lower Bollinger bands. The price has rejected from the middle Bollinger lines continued to fall and broke through the lower Bollinger line. My recommendation is to drop prices and sale positions.
It can see the entry points on the picture and the optimal timing for trading. Short positions below 1.49400 with targets 1.48400 and 1.47750 in extension.
Supports and resistances levels
1.49400 last price
The currency pair EUR/USD is still in a slight uptrend as a result of the weakening US currency. Fed for now does not intend to increase interest rates has had an impact on the value of the dollar, which has further weakened. Mario Draghi expressed his concern in his speech yesterday because of the attitude of Greece after being charged for the ECB to blackmail Greece new program of buying bonds. In fact, of all the countries of the euro zone only Greek bonds are not covered by this program purchases. Manufacturing in the euro zone expanded in March to 51.9 points from 51.0 in February. Analysts had expected a rise to 51.5 points. Preliminary index of the services sector rose to 54.3 points from 53.7 in February, and it has predicted to rise to 53.9 points. The composite index increased from 53.3 in February to 54.1 in March. Production in Germany has improved in March to 52.4 points from 51.1 in February, while economists had expected growth to 51.6 points. The index of the services sector rose to 54.3 points from 53.7 in February, and predicted to rise to 53.9 points. The composite index, or a combination of manufacturing and service sectors, fell to 53.8 points in February from 55.3 in March. The manufacturing sector in France rose in March to 48.2 points from 47.6 in February, but is still in contraction territory. Analysts had expected growth to 48.9 points. Preliminary index of the service sector fell to 52.8 points from 53.4 in February, which was in line with expectations. The composite index fell to 51.7 points in March from 52.2 in February.
On the hourly chart of currency pair EUR/USD price has rebounded from the middle Bollinger lines. Price continued to oscillate and began to grow. My recommendation is to increase prices and buying positions. The pair has validated a bullish flag and remains on the upside, approaching the previous top. It can see the entry points on the picture and the optimal timing for trading. Long positions above 1.09300 with targets 1.10400 and 1.10900 in extension.
Supports and resistances levels
1.09830 last price
Bollinger bands Conclusion
A technical indicator that allows users to compare volatility and relative price levels over time. It consists of three tape so that it covers most of the price currency. Prices will often meet resistance at the upper band and support at the bottom. Bollinger bands is very useful trading tool indicators for forex trading. It can be implemented by beginners, intermediate or seniors traders. Simple to use. It is needed to watch the charts and price movements between Bollinger bands lines: upper, middle or lower Bollinger bands.