Bollinger Bands Stepper
The interpretation of the Bollinger Bands is based on the fact that the prices tend to remain in between the top and the bottom line of the bands.
- Abrupt changes in prices tend to happen after the band has contracted due to decrease of volatility;
- If prices break through the upper band, a continuation of the current trend is to be expected;
- If the pikes and hollows outside the band are followed by pikes and hollows inside the band, a reverse of trend may occur;
- The price movement that has started from one of the band’s lines usually reaches the opposite one. The last observation is useful for forecasting price guideposts.
To avoid a spontaneous entries one may use this update from Bollinger Bands Indicator = Bollinger Bands Stepper.