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This indicator is popular with traders because it automatically adjusts to volatility currently being experienced in a particular market. They may be used on intra-day, daily, weekly and even monthly charts. Bollinger has noted several common characteristics of markets analyzed using the them:. While these are not hard and fast rules, they do give traders insight into where prices may head in the near future. We will examine each of these scenarios using our minute ES chart.
Chart created using MultiCharts. Over the late evening of April 8, prices of the ES entered a period of low volatility as they often do in the evening, as evidenced by the width of the envelope created by the upper and lower bands narrowing substantially.
On its own, the evening contraction in volatility did not give traders information as to which direction the move in price would take. Only that an bollinger bands day trading dubai in volatility or a sharp price change was likely. Luckily, Bollinger Bands can give traders information as to the likely direction of price changes as well. After the contraction in volatility observed in the late evening, bollinger bands day trading dubai could have been on the lookout for a sharp prices move up or down.
Information as to the direction this price move was going to make could be gleaned when prices moved and closed below the lower band, just before midnight. Prices bollinger bands day trading dubai to move lower and volatility continued to increase until about 4: However, other observable data such as the Relative Strength Index RSI and the increase in volatility could have given traders an idea that a key reversal was in place.
Traders who successfully bought this reversal could have used the upper band to set a price target. Prices moved quickly to the upper band just before 7: This move to the bollinger bands day trading dubai band coincided with overbought RSI readings. Please be advised that trading futures and options involves substantial risk of loss and is not suitable for all investors. Past bollinger bands day trading dubai is not necessarily indicative of future results. This matter is intended as a solicitation to trade.
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