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Technical Strategy: Trading with Double Bollinger Bands

Kathy Lien

DOI: 10.1002/9781119212997.ch9 (Economics, Econometrics and Finance)
Licence : non indiquée (tous droits réservés)

Résumé : Traditionally, Bollinger Bands are used as overbought and oversold indicators, but given the trending nature of currencies, there are more efficient ways to use the bands. Bollinger Bands consists of three lines, the 20-period moving average and the two standard deviation bands above and below the moving average. If the currency pair rises to the upper Bollinger Band, it is considered overbought because the move extended to an extreme level and should therefore be faded. Having two sets of Bollinger Bands on your chart is a much more effective way to pick a top or bottom in currencies. In addition to identifying levels to pick tops and bottoms, the double Bollinger Bands can also be very helpful in determining the market environment. One of the most commonly asked questions in forex is whether a currency pair is in trend or range.

Publié le 08 Déc. 2015