#TradingTales
📊 Bollinger Bands Indicator: Your Guide to Understanding Market Movements! 💡
Are you looking for a tool to help you accurately identify entry and exit points in the market? 👀
Meet the Bollinger Bands Indicator – one of the most popular technical analysis tools used in financial markets!
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🔍 What is the Bollinger Bands Indicator?
It is an indicator composed of 3 lines drawn around the price movement:
1. Middle line: Simple Moving Average – usually for a 20-day period.
2. Upper line: average + standard deviation × 2.
3. Lower line: average - standard deviation × 2.
💡 Main objective: Measure price volatility and determine if the market is in a state of overbought or oversold.
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📈 How is it used?
✅ 1. Rebound from the edges
When the price touches the lower line, a bullish rebound may occur.
And when it touches the upper line, a bearish correction may happen.
📌 Example:
If stock "X" is trading at $50, and it touches the lower line, it might be a buying opportunity if followed by a strong bullish candle.
✅ 2. Band Breakout
When the price strongly breaks through the upper or lower line, it may indicate the start of a new trend.
📌 Example:
Stock "Y" was moving in a narrow range, then broke the upper line with high trading volume. This could indicate the start of a strong upward movement.
