Friday, July 15, 2016

Bollinger Squeeze

Sometimes called the "Bollinger Squeeze," this technique has been adopted by the breakout style of stock or forex traders and involves findings market situations where the bands narrow tightly around the candles, showing a contraction or indecision in the price. These times of consolidation can lead to a movement in price as many traders know. This charting technique can be useful to the well planned and disciplined trader.
Bollinger Bands were invented by the market technician John Bollinger in the 1980's. He took the idea of the moving average, he then set a moving average on the trading chart as a "center line" that represented the average price of the stock being charted. He then calculated and applied two separate lines above and below the center moving average. The lines were formulated as a measure of volatility by showing the trader these Bollinger Bands as +2 and -2 standard deviations from the center line. Traders can use a momentum indicator such as ADX or MACD. Even multiple moving averages can give a trader looking to determine trend strength. These indicators can help you place a less risky trade.
Bollinger Squeeze