The function of the Bollinger Bands indicator is to define the relative highest and lowest prices of the market. Prices near the upper Bollinger Band are the highest prices, while prices near the lower Bollinger Band are the lowest prices. The Bollinger Bands consist of three lines, where the upper and lower lines can be seen as resistance and support levels for the price, respectively. The middle line between these two lines is the average price line, which is actually the 26-day moving average. In actual trading, breaking through or falling below the middle line can be used as signals for medium to short-term market trend reversals. The rebound short-selling method occurs when the price breaks below the middle line of the Bollinger Bands and the rebound is again suppressed by the middle line, allowing for short-selling based on this suppression. There are many indicators, but the Bollinger Bands indicator is relatively easier to use compared to others.
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When the upper and lower Bollinger Bands start to contract, the market enters a consolidation phase, oscillating around the middle line. When the price breaks below the middle line (as indicated by the circle) and the subsequent rebound is suppressed by the middle line, if it then falls below the previous low point, this can be used as a basis to enter a short position. The opening after the upper and lower Bollinger Bands have contracted to the extreme marks the beginning of market movement.