The Bollinger Bands indicator is one of the means of technical analysis, and it was named after its inventor “John Bollinger” in the early eighties and it is present on all MetaTrader programs. Through it, retracement areas can be expected instead of stationary levels.
The importance of the Bollinger Bands indicator
This indicator is used to determine the direction of the market, whether it is in a state of stillness and calm, or in a state of fluctuation in the price movement.
1. Upper limit: It is a positive standard deviation of the simple mean.
2. Middle bound: It is a simple moving average.
3. Lower limit: It is a negative standard deviation of the simple mean.
Uses of the Bollinger Bands Indicator
1. It is used to measure the volatility of prices in the markets.
One of the most important indicators that are used in determining the degree of market volatility and assessing its direction is the John Bollinger indicator. From trends, so you should pay attention if you notice the indicator moving sideways in a narrow range and because that will be followed by a strong movement in one of the directions so you must be prepared for this, and be strong of observation when you see the narrowing of the indicator’s borders as it will be followed by a strong movement.
And if the distance between the two borders of the indicator is wide, this is a sign of increased price fluctuations and therefore market volatility and instability, and this also reflects that the price has reached its peak for this, a reversal is likely to occur, and you as a trader can expect reversal areas by integrating the Bollinger Bands indicator with other indicators. momentum.
2. Bollinger bands indicator can be used as price targets.
The upper and lower bounds can be used as price targets, meaning if the price breaks through the upper boundary, then this boundary is considered a price target in addition to a support point as well. 95%.