The upper and lower bands of the Bollinger Bands gradually narrow after opening. The opening of the Bollinger Bands indicates a potential trend, while the narrowing signifies that the market has entered a consolidation phase.
When we notice that the price falls below the middle band of the Bollinger Bands, and the subsequent rebound does not break through the middle band, a further drop that breaks the previous low can be used as a basis for entering a short position. The reason for trading based on the middle band of the Bollinger Bands is that it can follow the direction of price fluctuations more closely compared to moving averages. If the middle band of the Bollinger Bands shows a clear upward or downward direction, trade in the direction of the middle band, which generally avoids significant losses. Additionally, since the middle band of the Bollinger Bands is a 26-day moving average, the method of using moving averages to determine trends can be applied to the middle band.
