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 What is a Bollinger Band?

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Posts : 22
Join date : 2011-04-13

PostSubject: What is a Bollinger Band?   Tue Aug 23, 2011 11:56 am

Bollinger Bands are designed to capture the majority of price movement. When prices move beyond the upper or lower band, they are considered high (overbought) or low (oversold) on a relative basis.

In general, the closer the prices move to the upper band, the more overbought the market, and the closer the prices move to the lower band, the more oversold the market.

Prices are relatively high when above the upper band and relatively low when below the lower band. However, relatively high should not be regarded as bearish or as a sell signal.

Likewise, relatively low should not be considered bullish or as a buy signal. Prices are high or low for a reason. - According to Bollinger, the bands should contain 88-89% of price action, which makes a move outside the bands significant. More about Bollinger Bands >>>
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