In the 1980’s, John Bollinger developed an indicator that enveloped price. 90% of the market action was maintained inside this envelope with price breaking out occasionally.
This envelope, or Bands, was designed to show the trader what the market volatility was like. A wider band meant more volatility while a narrower band meant a quieter market.
The standard Bollinger Band consists of a 20 period SMA as a center band with a band on either side of price enveloping the market movement.
There are several ways to trade a Bollinger Band, but the method we are specifically going to look at will be spotting Divergence within the bands.
WHAT ARE BOLLINGER BANDS
APPLYING THE BOLLINGER BANDS TO YOUR CHART
THE BOLLINGER BUBBLE
IDENTIFYING BOLLINGER BAND DIVERGENCE
– Bearish Divergence
– Bullish Divergence
WHAT DOESN’T WORK
VARIATIONS OF THE DIVERGENCE SETUP
– Inside Variation
– Outside Variation
– Bollinger Targets
– Bollinger Inside Close
– Bollinger Double Band
BOLLINGER PERCENT B INDICATOR
– Bollinger Percent B Divergence
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