Bollinger Bands Trading Signals

Bollinger bands indicator is made by John Bollinger, Bollinger bands is a Forex technical indicator that lets traders to determine volatility in a specific period. In other words, the Bollinger bands indicator gives a picture of high and low.
The Bollinger bands is built by 3 bands, a lower band, an upper band and a SMA line in the center.
The common interpretation of Bollinger bands indicator is the market price trades inside the bands (between lower and upper band). As we knew before that the standard deviation is a interpretation of volatility, this indicator become widen if the market is more volatile and during less volatile market the bands narrow.

Bollinger bands trading signals

Increasing volatility signals
This signals occurs when the Bollinger bands are Narrowing and usually traded by foreign exchange traders as a signals that the volatility is going to increase.

Decreasing volatility signals
This Bollinger bands signals are occur if the Bollinger bands indicator are widening and commonly traded by Forex day traders as a signals that the volatility is going to decrease.

Trend reversal trading signals
Tops and bottoms built outside the Bollinger bands followed by tops and bottoms built inside the Bollinger bands is identified as trend reversal signals

Trend continuation trading signals
This signal usually occurs if the market price trades outside the Bollinger bands.

These signals make Bollinger bands become good indicator and this indicator can bring an accurate analysis of the market price.


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Here are some custom indicators based on Bollinger bands, you can download them for free, and you can use it to improve your trading strategy. Enjoy !
- BBandWidthRatio Bollinger bands width ratio indicator

- EMABands_v1 Exponential moving average as middle band

- #MTF_BBANDS multi time frame bollinger bands indicator allows you to trader in different time frame

- AMA_Bands Adaptive moving average as middle bands