Key Points / BBands
BBands is the abbreviation for Bollinger Bands™, a popular technical indicator. BBands are available in TradingView basic charting library, with many advanced scripts and BBand strategies added into the script library by users.
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Best Markets for BBands
Bollinger bands are often used on forex markets, aside from crypto markets. They work well on markets that trade in pairs, such as currencies.
The reason for this fit is the fact that bbands are in fact a moving average with two standard deviations on either side.
Which means the information bbands are giving you when the price action ventures out of them is basically: “this ratio shot up a bit more then usuall - it might shoot back some time soon, but then it also might not”.
And so, now you can hopefully stop treating John Bollinger like a demi-god.
High-probability chart patterns with Bollinger bands
- Double bottom, taken relatively to the bottom bband (price is about the same distance from the bottom band at both lows, in actual value terms it can be different)
- Higher low, taken relatively to the bottom bband (price is lower on the second low, but is closer to the middle band than on the first low)
- BBand squeeze (the bandwidth strategy: the distance between the top and the bottom Bollinger band is decreasing, which means volatility is low, which means at some point the volatility might get high again - duh)
- Three pushes to a high (a topping pattern that relies on traders to be greedy in a market that is not as strong as it has been for a while until then - this buying-up results in a triple top where the consecutive tops get droopy, volume lowers and price wanders longer distance from the top Bollinger band)
An indepth look at BBands is here.