Let's look at how to use this common indicators to make us more winning trades, mostly a combination of other technical indicators, such as the stochastic oscillator.
Bollinger bands suggest instability in the market, and therefore we must always seek the change in volatility. Change always shows some of the big step and we wake up early to catch that. So what we have to look for is the following:
1) The bands are increasing: Volatility is to go beyond and can anticipate in the current direction. Therefore, make sure that we are correct about the current direction.
2) Bands are tightening: The volatility is declining. It may be the calm before the storm, and a large breakout may be on the road. But in which direction the breakout?
1a) The extension of the Bollinger Bands (bullish):
This general pattern that occur in some bands holding candles with low volatility in the short with a big move)
- The bands widen the upper band moving back and snaps down and down.
- The price action is moving upward.
- Last candlesticks candle holders are longer than the previous
Action:
- Check the RSI (Relative Strength Index) is between 30-50, and rising.
- You can also check if the ADX is rising towards 25 25/beyond DI and + DI border.
- Check the Slow Stochastic crosses above the signal line (bullish).
- If the above happens, then we can expect further price movement upwards. It 'safer and therefore better to wait 2 or 3 candles of a trend and then having to buy a record. It also happens that, before going to move there may be some downward correction and wait for the two-thirds of candles can help increase profits.
If the ADX moves above 25, then the upward movement may be limited and therefore profit-taking will be limited
1a), the extension of the Bollinger Bands (Bear):
This model usually happens a couple of live bands with low volatility over short candles in business)
- The bands widen the upper band moving back and snaps down and down.
- The price action is moving downward.
- Last candlesticks are longer than the previous candle.
Action:
- Check if the RSI (Relative Strength Index) is in the range from 55 to 75 and falling.
- You can also check the ADX (Average Directional Index) is increasing in the direction 25/beyond 25 and DI-DI crossed +.
- Check the slow stochastic line crosses the low signal.
- If all the above take place then we can expect a downward movement in prices. Will be safer and therefore preferable to wait 2 or 3 candles to confirm the trend and then take a short position. It also happens that, before going through there may be some upward revision and the waiting time for 2 / 3 candles can help increase revenue.
If the ADX moves above 25, then the downward movement may be limited and therefore profit-taking will be limited.
2) setting Bollinger Bands (uptrend):
The scheme is going through a prolonged sideways movement with lower volatility (short candle)
- Check for a minimum of 2 consecutive bullish candlestick (green) that is longer than the 2-3 previous candlesticks.
- Check if the RSI (Relative Strength Index) is in the range of 30 to 50 and rising.
- You can also occur if the ADX rises to 25 and 25/beyond through DI + DI.
- Check the Slow Stochastic crosses above the signal line.
- If all the above takes place, then we can expect a flare up. It will be safer and therefore better to wait two or three candles for confirmation before taking a buy position with a red light.
If the ADX does not move more than 25 so that the upward movement may be limited and thus profit taking would be limited
2b) tightening Bollinger Bands (downward trend):
The scheme is going through a prolonged sideways movement with lower volatility (short candle)
- Check for a minimum of two continuous bearish candles (red) that are longer than two or three spiders.
- Check the RSI (Relative Strength Index) is between 40-60, and fall.
- You can also check if the ADX is rising towards 25 and 25/beyond-DI + DI crossed.
- Check the slow stochastic line crosses the low signal.
- If all the above takes place, then we can expect a break down. It will be safer and therefore better to wait two or three candles for confirmation before taking the position to sell at a red light.
If the ADX does not move more than 25 so that the upward movement may be limited and thus profit taking would be limited.
3a) The continued upward trend after correction
During the upward trend of prices can be rotated in the band East, or even the lower band.
- Check if the RSI (Relative Strength Index) is in the range of 30 to 50 and rising.
- You can also check if the ADX is above 25 + DI and-DI above.
- Check if the slow stochastic is the signal (bullish configuration).
- For all the above you can expect a continuation of the upward trend. It 'safer and therefore better to wait 2 or 3 candles to confirm that the recent move was just a correction and then take the drive to buy
3b) the downward trend continues, after correction
During the continuous downtrend in prices can be rotated in the band East, or even the upper band.
- Check if the RSI (Relative Strength Index) is in the range of 55 to 75 and the fall.
- You can also check if the ADX is above 25 and above DI + DI.
- Check the Slow Stochastic is below the signal (bearish configuration).
- With all the above we can expect a continued downward trend. It will be safer and therefore better to wait two or three lights to confirm that the last movement was just a correction and then take a short position.
No comments:
Post a Comment
my blog is dofollow. please comment, but do not spam. thanks