Bollinger Bands

Price bounces can be triggered by contact with any kind of support and resistance area. This can be a daily pivot line, a horizontal price support, a moving average line, or a Bollinger band line to name just a few.

The classic way to trade the Keltner channel is to enter the market as the price breaks above or below the channel. This is simple crossover and is a typical breakout strategy.

This momentum strategy is very straightforward. All you need is the Bollinger bands indicator and to do some basic checking of chart candles. It trades on chart patterns that display signs of pending momentum – that is upward or downward acceleration in price.

What I describe here is a decision based trading system that trades on inputs from several chart indicators. This strategy learns the “relative reliability” of any indicator input from experience.

Bollinger bands actually comprise three separate indicators and each tells you something about the price activity at a current point in the chart. This article looks at the Bollinger indicator, what each component of the indicator means.

The idea behind this scalping strategy is to catch the short wave retracements that take place when the market reaches a peak overbought or oversold state. It is best applied to ranges.