Trade Forex Trading

Bollinger Band Strategies

Bollinger Band Indicator Strategy

The Bollinger Band works as a way to measure how much the market changes. The Bollinger Band is a tool to show price on trades.

Bollinger Band consists of 3 lines or bands: the middle band (moving average), an upper band a lower band. These 3 bands will enclose price & the price will move within these three3 bollinger bands.

Bollinger Bands create upper and lower lines around a moving average. The standard is a 20-period simple moving average. They rely on standard deviation to set those bands.

The example of Bollinger Bands indicator is displayed below.

Three Components of the XAU USD Bollinger Band: Upper, Lower, and Central Band Illustrated

Bollinger Bands Guide - Trade XAU USD with Bollinger Method

Bollinger Bands are inherently adaptive due to their reliance on standard deviation to measure price fluctuations. Higher volatility leads to increased standard deviation, causing the bands to widen. Conversely, lower volatility results in a smaller deviation, leading to narrower Bollinger Bands.

Bollinger Bands track price swings for key details. The info covers things like:

  • Periods of low volatility - consolidation period of the market.
  • Periods of high price volatility - extended trends, trending markets.
  • Support and resistance levels of the price.
  • Buy & Sell points of price.

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