BOLLINGER BAND

21 de jun. de 2022

John Bollinger invented the Bollinger Bands, which are a sort of price envelope. Bollinger bands help determine whether prices are high or low on a relative basis. They are used in pairs, both upper and lower bands and in conjunction with a moving average. Bollinger Bands are price envelopes drawn at a standard deviation level above and below the price's simple moving average. The bands respond to volatility fluctuations in the underlying price because their distance is based on standard deviation. Bollinger bands are used to evaluate if prices are relatively high or low. They're employed in pairs, with upper and lower bands, and with a moving average in between. The indicator's main line is a simple moving average (SMA). This charting software defaults to a 20-period chart, which is sufficient for the majority of traders. At 7/6/2022, the price reached the top at the band at 51.91. After that, As can be seen, the price has settled back into the middle of the bands. Then at 21/6/2022, the price break the Lower band. This information help me add context to trends and potentially determine when they might be overextended and reverse. When it does, probability theory assumes the security price is likely to revert back to a moving average, or mean, between the upper and lower bands. This is called mean reversion and this is use as trading decision for me. Then I set a Entry/ Buy price at 39.89, Target Profit near the middle at 43.13 and Stop Loss Below the Lower Band which are 35.76.