Indicator of Bollinger borders
consists of two lines. They are placed on the equal distance to definite amount of usual discrepancies. While the value of standard deflection depends on the price unsteadiness, the lines automatically control their width. The width increases if the market of forex trading is more volatile and decreases when the market is not so unsteady.
The lines of Bollinger resembles the Envelopes Moving Averages indicator. The basic distinction between these indicators in forex trading is that the borders of envelopes are placed over and under the line of changing average on the certain distance, which is calculated in percents, while the borders of the Bollinger lines are placed on the distances equal to definite number of standard deflections.
Here are the features of Bollinger's lines:
- The fluctuations of the prices in forex trading which begin from one of the line's borders, as a rule, reach the other border. The aforesaid feature can be helpful for forecasting price's orienting points.
- Uncontrolled changing of prices often happens after the line's shortening, which indicates decreasing of unsteadiness.
- If after the rises and falls outside the lines there are rises and falls inside the lines, it's probable that the turn of tendency can occur.
- If the prices go outside the borders, the ongoing tendency is expected to be continued.
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Bollinger Bands
can help in forex trading to define if ongoing data field values are behaving normally or breaking out in a new direction. For instance, when the closing price of a currency pair in forex trading moves over its upper Bollinger Band, it usually increases in that direction.
Bollinger Bands
also helps to find out when trend reversals may happen. A reversal is usually characterized by new peaks or falls outside of the bands followed by another peak or fall inside the bands.
High values of ATR
usually are the result of quick fluctuations in the market of currency trading and seldom stay like this for the long period. As ATR indicates absolute volatility value currency pairs on Forex with the low prices will have with other things being equal lower ATR and on the opposite.
Bollinger Bands
are a pair of values put as an "envelope" around a data field. To measure the values you should take the changing average of the data in the market of forex trading for a definite period and subtract or add the definite number of standard deflections for the same period from the moving average.
Bollinger Bands resemble
Trading Bands and share many of their traits. However trading bands do not differ in width based on inconstancy.
