So basically, they adjust to the movement and volatility of the market. This extra volatility filter is the real value of this tool.There are two conditions we look for in a trading opportunity. We want to buy a pullback down to support when the market is in an uptrend or sell a rally up to resistance when the market is in a downtrend. The BoThis is the second article in our Bollinger Bands series.
In that article, we covered the background of the Bollinger Bands indicator, how it is calculated, and how it looks on a chart. John Bollinger designed his bands in order to measure if prices were high or low on a comparative basis with relative volatility. The indicator looks like an expanding and contracting envelope drawn about the pricing indicia on a typical chart. The upper one is the maximum positive deviation and the lower o.
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