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What are the Best Strategies for Using Bollinger Bands 3
What are the Best Strategies for Using Bollinger Bands
#forex trading # trading strategies #bollinger bands #bollinger strategy bands
Bollinger Bands or Bollinger Lines are one of the technical indicators that are quite popular among forex traders. These technical indicators are commonly used to determine the direction in which the market moves, determine volatility, determine overbought or oversold conditions.
What are the Best Strategies for Using Bollinger Bands.jpg Figure 1. The Best Strategy in Using Bollinger Bands
Bollinger Bands Components
This indicator consists of 3 lines, namely the Simple Moving Average (SMA) line and also two lines that are above and below the SMA line. The upper line is called Upper Bollinger Band, while the bottom line is called Lower Bollinger Band.
For Bollinger Bands
The Bollinger line is used to indicate the rise and fall limits of forex prices. The most important thing you should see from Bollinger Bands is the average price movement. This movement shows the forex medium-term trend in accordance with the time period you monitor.
Forex Trading Strategy Using Bollinger Bands
When analyzing forex trading, you will probably be familiar with some common patterns that arise. To further analyze these patterns, you can use Bollinger Bands indicators. Here are strategies that you can use with Bollinger Bands.
1. Bollinger Bands during Sideways
Basically, Bollinger Bands are used when markets tend to be sideways. This indicator can determine when you enter. As a guide:
If the price breaks above the SMA-20 level, you can enter the market when the candle closes above the 20-SMA. Target exit positions when prices reach Upper Band.
If the price breaks below the 20-SMA level, you can enter the market when the candle closes below the 20-SMA. Target exit positions when prices reach Lower Band.
2. Bollinger Bands when Trending
Although forex traders usually use Bollinger Bands during sideways market conditions, this indicator can also be used when the market is trending.
If the price has passed the upper band and the closing price is outside the band, it means that the condition is uptrend. Conversely, if the price passes the lower band and the closing price is outside the band, it means the condition is downtrend.
Look at the next bar when the entire bar formation is outside the band to ensure that the trend has been formed.
3. Bollinger Bands with Double Bottoms Pattern
You can use Bollinger Bands if a double bottom pattern appears. When this formation is formed, trading volume is usually strong and there is a sharp decline in prices until it can cross the bottom line of Bollinger.
Bollinger Bands can then be used to see conditions that do not cross the line. That is, the power that pushes down market prices has decreased. Market conditions have changed from what was once full of sellers to being full of buyers.
Thus the explanation of the strategy of using Bollinger Bands when trading forex. Hopefully it can help you get the maximum benefit.
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