BOLLINGER BANDS INDICATOR

Bollinger Bands, a technical indicator created by John Bollinger, gauge market volatility and spot "overbought" or "oversold" conditions. Essentially, they indicate whether the market is calm or loud.

In quieter markets, the bands contract, while in louder markets, they expand. These bands automatically adapt to shifting market conditions since they measure volatility. Bollinger Bands consist of three lines: An upper band, a middle line, and a lower band.

The most common strategy for this indicator is the "Bollinger Squeeze." It is when the bands tighten and usually signals an impending breakout.

If the candles break out above the top band, it typically leads to an upward movement. Conversely, if the candles break out below the bottom band, the price generally continues to decline.

BUY SETUP

 For a buy setup,

        ● Wait for the Bollinger bands to come together for a Bollinger squeeze. It is an area of low volatility that usually comes before a breakout.

        ● Wait for the price to break above the top band and place your buy entry. A break above the top band shows the possible start of a bullish trend.

        ● Place your stop loss below the previous low.

        ● Place your targets accordingly, depending on your strategy and risk-reward ratio.

SELL SETUP

For a sell setup,

        ● Wait for the Bollinger band to come together and make the Bollinger squeeze pattern.

        ● Wait for a break below the lower band and place your sell entry.

        ● Place your stop loss slightly above the previous high.

        ● Place your targets accordingly, depending on your strategy and risk-reward ratio.

CONCLUSION

Bollinger bands are a powerful tool to measure volatility in the market. The indicator can point out areas of low volatility that offer traders good trading opportunities.

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