Bollinger Bands - Bollinger Band Forex Indicator Ireland

Forex Indicators

• Bollinger Bands
• Fibonacci Retracement
• MACD
• Moving Average
• Exponential Moving Average
• Simple Moving Average
• RSI (Relative Strength Index)
• Stochastic

Bollinger Bands are a Technical Analysis tool that rose to fame sometime in 1980. It was invented by a gentlemen by the name of John Bollinger.

The primary use of Bollinger Bands is to identify overbought and oversold conditions in the forex markets. It is a popular tool that is widely used in forex trading but especially in stock trading.

Much of the foundation of Bollingers work was based on the research of Hurst, who did research on trade envelopes in 1970.

John Bollinger improved on Hurst's theory by using a dynamic tool as opposed to a fixed tool. He did this by running a 20 period moving average through prices along with a high and low deviation band.

It is normally used with other forex indicators such as the stochastic indicator or RSI indicator. The interesting thing about bollinger bands when applied to price is the fact that they tend to act as support and resistance.

As such, price tends to bounce from either high or low deviations on the charts. Also, should price close outside of the deviation bands, this sometimes signals a change in the general trend. Another fascinating aspect of bollinger bands is how the price in a trending market tends to find support at the middle band, which is the 20 period moving average. In such instances, resistance is usually find at the high or low deviation bands.

The above situation where trending price bounces off the middle band and the upper or lower bands is called riding the band. Such instances usually mean there is a good trend in place.

While bollinger bands can be used alone, they are better off being used together with a number of other indicators.

Using it with Japanese candlestick patterns or price action formation can really give an added advantage to the technical forex trader.

They are used in a wide variety of financial markets that include stock trading, futures trading as well as commodities trading.

This makes bollinger bands an excellent tool that can be applied to all the markets above.