Bollinger Bands

                                                         Bollinger Bands

Strips Bollinger 
During periods of high price volatility is to
Bounded some areas within which are expected to oscillate prices so
to show the support and the resistance. These strips provide psychological
levels entrapment prices and conditions for waiting violent reactions
(Ascending or descending).
The strips of Bollinger consist of a simple moving average of 20 days (as
recommended by Inspire John Bollinger) which is surrounded by two strips.
The strip located above the KMO occurs if we add to this two
standard deviations of prices. The strip on the bottom of the moving average apparent when
subtract from this two standard deviations of the price. These two lines of standard
discrepancies are the upper and lower limit of the strips of Bollinger.
When the volatility and fluctuations in the stock rise, then the width
the bands of Bollinger increases as grows the standard deviation of prices. The
Bollinger direction of the strips depends on the same direction of the mobile
average of 20 days. The behavior of these bands depends on the
behavior of the price trend.
In a strong up trend, the Bollinger bands have limited
amplitude and direction is upward. When the voltage matures and displays fatigue,
lanes open with increasing volatility. To strong downward trend,
lanes are narrow and downward. Cathode strips by increasing their width,
mean weakening downtrend.

The trading rules based on the Bollinger bands are as follows:
Ø Upward break the upper limit Bollinger from the closing price, shows strong
uptrend and signals market share. Ø If the price break upwards in the upper limit Bollinger, but then form top down from it, the price decline and reversal of a previous uptrend. Ø downward penetration of the lower limit Bollinger marks down the price, so we sell the stock. Ø If the price break downward the lower limit but then create bottom over then the boundary will follow recovery. Ø Failure of money to cleave the lower limit means the possible opening movement to the upper limit and the opposite for the cleavage failure of the upper limit. Ø An upward movement in the price to the upper limit will encounter resistance Bollinger in this. Ø A downward movement in the price to the lower limit Bollinger will find support at the limit it. Ø Any attempt to move the price of the nerve above the lower limit to be encountered in the support at least the short moving average of 20 days and each bounce the value from the lower to the upper limit will face opposition in the same moving average. Ø After each dramatic narrowing of the Bollinger bands will expectbacklash prices, the direction of which can be predicted from other technical indicators. Ø Lanes Bollinger tend to increase in width in areas more peaks than the price in the base regions. Lanes Bollinger is an indicator similar to the surrounding mobile averages. The difference between them is as follows: the envelopes formed with predetermined rates above and below the moving average, while the strips Bollinger formed with a relative deviation of the average. Because standard deviation is a measure of how volatile a stock is, the strips modified themselves, ie let out when the change of the share is significant and narrow when volatility is low. Bollinger bands are presented on the same graph with the share price. As case with the media environment conditions, the basic interpretation of the strips is that the prices of shares tend to remain within certain limits, an upper and a lower. The distinguishing characteristic of Bollinger bands is that the distance between the upper and lower band depends on how volatile a stock is. The John Bollinger observes, inter alia for the index:  Significant changes in the share price often occur when the distance between the upper and lower band diminishes.  When the stock price goes out of the two lanes, following movements of share proportional to the slope of the line direction.  Minimum and maximum values ​​that occur outside of the two lanes and accompanied by minimum and maximum values ​​within the lanes, usually harbingers direction changes (the rise will be downward or vice versa.) When the stock price meets one of the two lanes, the trend in the time period that follows is to meet and other lane. Such labeling is useful when trying to estimate the upper and lower limits of the stock prices in the near future.