Been seeing Bollinger Bands mentioned everywhere but honestly not sure what they actually do or how to read them properly.
Anyone here use them regularly in their trading setup? What should I be looking for when the price hits the bands?
Bollinger Bands shift with volatility. When they squeeze together, expect a big move coming.
I watch how price reacts at the bands instead of chasing breakouts. It works better when markets are sideways.
Don’t expect price to bounce every time it hits a band. Sometimes it just keeps running in the same direction.
Price sticks to the bands in a strong trend. The upper band is more effective in sideways markets than during strong trends.
Just use them for squeeze plays honestly.
Bollinger Bands indicate market volatility and potential reversal points. The middle line is a 20-period moving average, while the upper and lower bands are set 2 standard deviations away. When the price touches the upper band, it may be due for a decline. Conversely, a hit on the lower band could signal a bounce. However, relying solely on the bands is risky. Instead, pay attention to squeezes. When the bands tighten, it suggests low volatility and an impending breakout. Combining this with RSI enhances your signals. If RSI shows overbought near the upper band, it increases the chance of a reversal.