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See the MegaTraders Bollinger Bands technical indicator on interactive charts now. Click here.
| Category: | Channel |
| No. of Plots: | 2 (hereafter BHi and BLo) |
| Screen Location: | Overlays bars / candlesticks |
| Plot Style(s): |
BHi - Orange line BLo - Orange line |
| Plot Significance: |
BHi - Orange line (the upper channel line) BLo - Orange line (the lower channel line) |
| Details: |
The Bollinger Bands shown on the charts pages are lines drawn 2 standard deviations above and below a 20 bar simple moving average. By using +2 standard deviations we can expect approximately 95% of all price activity to fall within the Bollinger Bands. Therefore, when price falls outside the bands we have an extreme condition. However, it is not uncommon for price bars to overlap or remain outside the bands for several bars. The bands are affected by market volatility. As volatility decreases the bands become narrower. Band width will expand rapidly as volatility increases. |
| Indicator Characteristics: |
Retracements can uncannily go from one band then bounce off the other side before advancing again. Rapid and significant prices moves can be expected after the Bollinger Bands have narrowed. |
